US benchmark West Texas Intermediate (WTI) for February delivery was down 71 cents at $45.36 a barrel in late morning trade and Brent crude for February dropped 70 cents to $46.73.
On Monday, Brent plunged more than five percent to close below $50 for the first time since April 2009, and WTI fell 4.7 percent to its weakest since March 2009.
Analysts are already predicting prices will eventually fall below the psychological level of $40 a barrel this year. Goldman Sachs predicted WTI to hit $39 a barrel in six months, down from its $75 forecast previously.
It also cut its outlook for Brent, adding that it thought the oil market would continue to experience oversupply for several months.
“There is no numeric target but the depth of fall in oil prices is disconcerting,” said market analyst Michael McCarthy at CMC Markets Sydney.
“We need to see more significant falls in shale drilling production before the supply glut is overturned and prices stabilise.”
The excess in global supplies has been attributed to an increase in shale gas production in the United States and a return of Libyan oil into the market following a prolonged disruption due to a civil strife in the North African crude producer.
There are some signs pointing to an increase in crude oil demand, with China reporting a trade surplus rise of 45.9 last year, but analysts said the market remains jittery.
“Although China’s demand and growth is not as weak as it seems, the market is in panic mode at the moment and we are seeing capitulations,” said McCarthy. (AFP)