HONG KONG: Oil prices extended the previous day's sharp losses on Friday, dragging energy firms and Asian markets with them as investors are snaggled by fresh global supply glut concerns.

While traders are looking ahead to the release of crucial United States (US) jobs data later in the day, the collapse in crude prices has dented optimism on trading floors, with analysts warning about the possible effects on the economy.

Both main contracts tumbled around two per cent in Asia - following losses of almost five per cent Thursday - on fears about increased production from the US, Libya and Nigeria and the Organization of the Petroleum Exporting Countries (OPEC) cartel's commitment to extending an output cut beyond a six-month agreement.

Renewed weakness in China, an expected hike in US interest rates - which could make dollar-denominated oil more expensive to holders of other currencies - and signs of slowing demand have also contributed to the dive.

"OPEC has been looking down the barrel so to speak, of resurgent supply from Nigeria and Libya amongst OPEC and of course, American shale which combined have completely offset the 1.8 million barrel per day production cut agreement," said Jeffrey Halley, senior market analyst at OANDA, in a note.

"There was no light at the end of the tunnel for OPEC and non-OPEC producers... in fact, the light turned out to be the train coming the other way."

Both contracts are now sitting at their lowest levels since OPEC and Russia agreed in November to cut back production in a bid to raise prices.

"There's disappointment that the production cuts we've seen from OPEC and others has not had any impact at this stage on global inventory levels," Ric Spooner, a chief market analyst at CMC Markets in Sydney, told Bloomberg News.

"The market seems to be much further away from a balanced situation than some had previously forecast. There is a possibility that oil could be headed to the low $40s range from here."

The oil collapse sent Hong Kong-listed PetroChina tumbling 2.4 percent and CNOOC skidding more than one per cent.

In Sydney, Woodside Petroleum lost 2.7 per cent, Santos sank three per cent and miner Rio Tinto lost two percent, with tumbling metals prices also acting as a drag.

Among the region's main indexes Hong Kong fell 0.8 percent, Shanghai ended 0.8 per cent lower and Sydney slipped 0.7 per cent while Singapore retreated 0.2 per cent. Taipei and Jakarta also suffered losses.

Investors are now awaiting the release Friday of jobs figures for April, which will be closely watched for clues about the Federal Reserve's plans for hiking interest rates.

The central bank is expecting to lift borrowing costs next month but with the oil price crisis returning, policymakers could be more reticent owing to the possible impact on inflation.

Speeches by Fed boss Janet Yellen and several of the bank's top officials will also be closely watched Friday.

The pound edged up as it emerged the ruling Conservative Party was set for a big win in local polls, weeks before a general election markets hope will provide Prime Minister Theresa May a more stable government going into key Brexit talks.

In early trade London fell 0.2 per cent, Frankfurt shed 0.4 per cent and Paris was down 0.5 per cent. -- AFP