Even if the plan wins approval, oil market traders are skeptical that it will steady the teetering U.S. economy and reverse flagging demand for energy in the world's largest consumer. The plan would remove billions of dollars in bad mortgages and other toxic debt from the books of banks and other financial firms, though critics argue it doesn't go far enough to help ordinary Americans struggling with soaring costs for food and fuel and falling home prices.
"I think the oil market believes that no size of a rescue plan is going to be enough to stave off a recession," said Addison Armstrong, director of market research at Tradition Energy in Stamford, Conn.
He said government data released Thursday showing a slowdown in U.S. manufacturing and growing unemployment suggest that a drop in U.S. energy demand "is going to accelerate as we head into a steeper recession."
Light, sweet crude for November delivery fell $3.73 to $94.80 a barrel on the New York Mercantile Exchange. Prices earlier jumped as high as $100.37 but eased back later as traders digested the details of the revised bailout package.
The November crude contract fell $2.11 to settle at $98.53 on Wednesday.
Oil prices have fallen about $15, or 13 percent, in the past month as investor concerns about waning global energy consumption outweigh threats to supplies caused by Gulf Coast hurricanes and militant attacks in Nigeria.
Significant gains over the past days by the dollar against the euro have also helped push down prices. Investors tend to buy commodities like oil to defend against dollar weakness and a hedge against inflation, but return to the U.S. currency as it strengthens.
The 15-nation euro bought $1.3833 in trading Thursday, down from $1.4061 in the previous session.
Meanwhile, statistics from the U.S. Labor Department released Thursday showed more signs of a weakening economy, adding to concerns about falling oil demand.
The Labor Department reported that initial claims for jobless benefits increased by 1,000 to a seasonally adjusted 497,000, significantly above analysts' estimate of 475,000. The total is the highest since just after the Sept. 11 terrorist attacks seven years ago.
Also Thursday, the Commerce Department said factory orders in August plunged by 4 percent compared to July, a much steeper decline than the 2.5 percent drop analysts expected and the biggest setback since a 4.8 percent plunge in October 2006.
Recent data shows that U.S. fuel demand is falling while supplies rise.
The Energy Department's Energy Information Administration said Wednesday in its weekly report that crude stocks rose by 4.3 million barrels, or 1.5 percent, to 294.5 million barrels for the week ending Sept. 26. Analysts had expected stocks to rise or fall of 1.5 million barrels, according to a survey by energy research firm Platts.
At the same time, gasoline inventories rose by 900,000 barrels, or 0.5 percent, to 179.6 million barrels. Analysts expected stockpiles of the motor fuel to fall in the range of 1 million to 3 million barrels.
Fuel consumption for the four-week period ended Sept. 26 reached about 19 million barrels a day, down 7 percent from the same period a year ago, according to the EIA.
"The demand just isn't there," said Jonathan Kornafel, Asia director for market maker Hudson Capital Energy in Singapore. "The refineries aren't buying crude to turn it into gasoline because consumers aren't buying it on the road."
Kornafel predicted oil prices will trade between $80 and $90 during the next few months, with oil producers likely to cut production if prices fall further.
In other Nymex trading, heating oil futures fell 10.04 cents to $2.7465 a gallon, while gasoline prices lost 8.96 cents to $2.2704 a gallon. Natural gas for November delivery fell 19.1 cents to $7.537 per 1,000 cubic feet.
In London, November Brent crude fell $3.60 to $91.73 a barrel on the ICE Futures exchange.
Associated Press Writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report.