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LONDON (Reuters) - Oil dived under $50 a barrel on Thursday to hit the lowest level since May 2005, deepening losses as financial markets reflected ever lower confidence in the world economy and evidence mounted of falling fuel demand.

U.S. crude fell $3.26 to $50.36 a barrel by 1536 GMT after earlier touching $49.75, marking the lowest level since May 25, 2005, when prices hit $49.58.

London Brent crude shed $2.82 to $48.90 a barrel.

As economic slowdown has destroyed fuel demand, oil companies plan to store millions of barrels of oil in the hope economics will improve.

The number of U.S. workers filing new claims for jobless benefits rose by a larger than expected 27,000 last week to their highest level in 16 years, Labor Department data showed on Thursday.

"The unemployment data was yet another ugly data point in a seemingly never ending stream of poor economic numbers," said Michael Wittner, global head of oil research at Societe Generale.

"What makes it hard to call a bottom is that even when oil fundamentals firm up, if we're still having these waves of deleveraging it can overwhelm even the oil fundamentals."

Shipping brokers on Thursday said U.S. oil trader Koch and Royal Dutch Shell had booked supertankers capable of storing 10 million barrels of crude, more than top exporter Saudi Arabia produces in a day.

FOLLOWING EQUITIES

Oil has lost about two-thirds of its value since July's record above $147, in part because a global credit crunch has made investors pull their money out of riskier assets.

The falls on oil have mirrored weakness on equity markets, which dropped again on Thursday when European stocks hit their lowest level since March 2003.

"We're just following in line with the equity moves," said Energy Analyst Harry Tchilinguirian at BNP Paribas.

"Yesterday the Dow Jones fell over 5 percent, this morning it was Japan and Asia, and no surprise -- oil followed later."

Oil differs from other commodity markets in that producer group the Organization of the Petroleum Exporting Countries can intervene to curb supplies, in theory providing support for prices.

Since early September, OPEC has said it will remove around 2 million barrels per day from international markets, but the market has taken the view that falling demand is a bigger factor than tightening supply.

Deutsche Bank said on Wednesday oil could fall to as low as $40 a barrel next year.

Fears about their falling revenues have prompted some members of OPEC to urge further cuts as soon as possible and ministers are to gather for informal talks on November 29 in Cairo.

They will also meet again for a formal session on December 17 in Algeria.

(Reporting by Chris Baldwin; Editing by Anthony Barker)