Oil prices sank below $49 a barrel on Thursday, falling sharply for the second straight day and settling near a three-month low as traders reacted to data showing crude supplies rising in the United States and demand growth slowing in China.

The two-day slide of more than $3.50 a barrel caused the stock prices of major oil producers and refiners to tumble.

Light sweet crude for June delivery fell $1.91 to $48.54 on the New York Mercantile Exchange (search), where futures prices for gasoline and heating oil also declined. Crude futures fell by $1.62 on Wednesday. The last time crude futures settled below $49 was Feb. 18.

A barrel of oil is now roughly 20 percent more expensive than it was a year ago.

Crude oil futures surpassed $58 a barrel in early April but retreated in the face of steadily rising commercial inventories in the United States. Refiners are stocking up on barrels ahead of summer, when motor fuel demand tends to pick up.

The decline in oil prices has begun to trickle through at the pump. The average price nationwide is now $2.19 a gallon, down from the high a few weeks ago of $2.28.

While the Energy Department recently lowered its summer gasoline price forecast, analysts said the market remains volatile and that it was too soon to declare the worst is over.

"The market is under some pressure," said Tom Bentz, a broker at BNP Paribas Commodity Futures in New York. "But there's still a chance that we have not seen a top yet."

Still, equity investors weren't taking any chances.

Shares of Exxon Mobil Corp. (XOM) fell $1.84 to $55.45 on the New York Stock Exchange, where shares of Chevron Corp. (CVX) slumped $1.65 to $51.75. Exxon's stock has traded in a range of $42 to $64.37 over the past 52 weeks, while Chevron's has traded between $44.40 and $63.15.

Shares of independent refiner Valero Energy Corp. (VLO) slid $4.35 to $62.85, while those of Tesoro Corp. (TSO) dropped by $2.41 to $38.66. Valero's 52-week trading range is $31.31-$81.95, Tesoro's is $19.89-$43.25.

Nymex gasoline futures fell 5 cents to $1.432 per gallon. Heating oil futures dropped by 2.35 cents to $1.3796 per gallon.

On London's International Petroleum Exchange (search), June Brent fell $1.50 to $48.57 a barrel.

The U.S. Energy Department (search) said Wednesday that domestic crude inventories grew by 2.7 million barrels last week to 329.7 million barrels, or 10 percent above year-ago levels.

The Paris-based International Energy Agency (search) said that Chinese oil demand rose by 4.5 percent in the first quarter, compared with a 19.3 percent year-on-year jump in the first three months of 2004.

The IEA also said it expects OPEC and other producers to meet peak demand in the fourth quarter — a period of time that some analysts are worried about. It warned that spare output capacity would remain thin, however, meaning markets should remain jittery about potential supply bottlenecks or unexpected disruptions.