* U.S. crude oil stocks at highest level since 1990-EIA
* Disappointing U.S. economic data also weighs on oil
* Coming up: U.S. jobless claims data 8:30 a.m. EDT Thursday (Updates to afternoon trading, adds quote)
By Anna Louie Sussman
NEW YORK, April 3 (Reuters) - Oil prices fell 3 percent on Wednesday, in the steepest daily drop in five months, as U.S. crude inventories rose to their highest since 1990 and weak economic data weighed on the outlook for demand.
Selling was widespread across oil markets, with U.S. gasoline leading the slide, falling more than 4 percent and taking losses for the last two sessions to almost 20 cents a gallon.
Brent crude oil for May delivery settled down $3.58 at $107.11 a barrel, the biggest one day percentage fall since Nov. 3. During the session Brent prices hit a four-month low of $106.78 a barrel.
U.S. crude settled down $2.74 at $94.45 a barrel, having fallen as low as $94.18. It settled below the 50-day moving average of $94.64, a key technical indicator watched by traders.
Selling started early in the New York session after a report on U.S. private-sector employment from payrolls processor ADP showed hiring was less than expected in March.
The decline accelerated shortly after the release of weekly U.S. Energy Information Administration data showing a larger than expected 2.7 million barrel increase in crude oil inventories.
The stocks are now at the highest level since 1990, totalling more than 388 million barrels, and are close to the all-time peak hit in 1982 of 391.9 million barrels, EIA data showed.
"Inventories are 26 million over last year, well above the four-year average," said Andy Lebow, vice president at Jefferies Bache in New York
U.S. RBOB gasoline futures fell more than 4 percent, after the EIA said gasoline stocks fell 572,000 barrels last week, less than expected and far below the drop of 5 million barrels reported late on Tuesday by the American Petroleum Institute.
"Gasoline bulls are particularly disappointed that the tightness that they were counting on has not materialized," said Timothy Evans, an energy analyst with Citi Futures Perspective in New York.
With the North American heating fuel season waning and crude futures sliding, U.S. heating oil futures, fell below the 50-day and 100-day moving averages, technical levels monitored by chart watching analysts and traders.
Brent's premium to U.S. crude
The spread between the two contracts had been widened because of expectations that crude stocks at the Cushing, Oklahoma, delivery point for the U.S. crude contract would be increasing after Exxon Mobil shut its Pegasus pipeline on Friday.
The pipeline moves crude oil from Illinois to the refinery-rich Texas Gulf Coast and a prolonged shut down would curb efforts to relieve the glut of crude oil in the Midwest.
The disappointing report on hiring arrived ahead of Friday's closely watched U.S. March nonfarm payrolls report, which investors will sift through for signs of whether the economy has been slowed by headwinds from a tighter fiscal policy, the sequestration or automatic government spending cuts.
U.S. nonfarm payrolls are expected to be up 200,000, according to a Reuters survey of economists.
The weak U.S. data adds to concerns about demand for oil, well established already because of Europe's wobbly economy, with reports this week showing unemployment up in the euro zone and manufacturing gauges indicating contraction.
Europe's demand for oil has also been hit by seasonal refinery maintenance, traders said. (Additional reporting by Robert Gibbons in New York, Peg Mackey in London and Luke Pachymuthu in Singapore; Editing by David Gregorio and Alden Bentley)