On the New York Mercantile Exchange, light sweet crude futures for delivery in June settled at USD98.55 a barrel by close of trade on Friday, tumbling 5.95% over the week, the most since the week ended September 23.
Earlier Friday, prices fell to as low as USD97.53 a barrel, the lowest since February 10.
Crude prices plunged nearly 4% on Friday, the biggest one-day drop since December 14. Oil's losses accelerated after prices broke below a key technical support level close to its 100-day moving average of USD102.36 a barrel, triggering fresh sell orders amid bearish chart signals.
Market participants also cited confusion over margin changes as another factor which aided the selloff.
The Department of Labor said Friday that the U.S. economy added 115,000 jobs in April, the smallest increase in six months and far short of expectations for a 170,000 increase.
The unemployment rate ticked lower to 8.1%, the lowest since January 2009. However, the data showed that the decline stemmed entirely from people dropping out of the labor force.
The weak jobs report added to uncertainty over the strength of the U.S. recovery and raised concerns over a slowdown in oil demand from the U.S.
Oil traders have long been taking cues from the monthly jobs report, the most-closely followed indicator of U.S. employment, because it offers insight into the economic health of the world's biggest oil consumer.
The disappointing data prompted investors to shun riskier assets, such as stocks and industrial commodities, and flock to the relative safety of the U.S. dollar.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, rose 0.4% on Friday to end the week at 79.60, the highest since April 23.
Oil prices came under further pressure as investors grew cautious ahead of weekend elections in France and Greece, amid fears leadership changes could hinder attempts to resolve the regions debt crisis.
There are worries that the region's sovereign debt crisis could trigger a broader economic slowdown that would curb demand for oil.
Market sentiment was roiled earlier in the week after a string of weak data from the euro zone pointed to a deeper-than-expected slowdown in manufacturing activity.
The euro zone accounted for nearly 12% of global oil consumption in 2010, according to data from British Petroleum.
Wall Street investment bank Goldman Sachs said in a report Friday that the oil market remains focused on the state of the global economy.
"The economic news from Europe and the U.S. has been a little disappointing. It looks like the U.S. is growing a little slower than we expected."
Meanwhile, a larger-than-expected build in U.S. oil supplies last week is forcing traders to refocus on the supply and demand picture.
The U.S. Energy Department said in its weekly report that crude oil inventories rose by 2.84 million barrels last week to a total of 375.9 million, the highest level since September 1990, underscoring fears over a slowdown in oil demand from the U.S.
The U.S. is the world's biggest oil-consuming country, responsible for almost 22% of global oil demand.
Nymex crude prices have fallen nearly 11% since hitting a March 1 intraday peak of USD110.53 a barrel, as tensions have eased between Iran and Western nations over the country's nuclear program and amid growing concerns over the health of the global economy.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for June delivery settled at USD113.47 a barrel by close of trade on Friday, after falling to as low as USD111.78, the lowest since February 2.
The Brent contract lost 5.06% over the week. The spread between the Brent and the crude contracts stood at USD14.92 a barrel by close of trade Friday.
Brent crude, the European benchmark, is more than 11.5% off its intraday high of more than USD128 hit on March 1.
A potential loss of Iranian oil supplies has helped underpin strong gains in oil prices during late last year and the first quarter of this year.
But revived talks between Iran and major powers over Tehran's nuclear ambitions, along with rising Saudi Arabian and Libyan output and signs of slower U.S. economic and employment growth, helped pull oil prices back from first-quarter highs.
In the week ahead, investors will be closely watching election results in Greece and France, while in the U.S. a speech by Fed Chairman Ben Bernanke in Chicago on Thursday will be in focus.
In addition, China is to release a flurry of data, including reports on retail sales and inflation that will allow investors to gauge the strength of the world's second largest economy.