US benchmark West Texas Intermediate (WTI) for November delivery was down 65 cents at a two-year-low $85.09 in late-morning trade and Brent crude retreated 74 cents to $88.15, its lowest since mid-2010.
Both contracts are down about a fifth from their 2014 highs touched in June.
Analysts said markets were becoming saturated owing to a rise in US shale gas production and a return of Libyan oil into the market.
Prices were further rattled after the Organization of Petroleum Exporting Countries (OPEC) signalled it has no intention of cutting output.
Kuwaiti Oil Minister Ali al-Omair said Sunday that he expects falling prices to recover during the northern hemisphere winter — but OPEC was unlikely to counter the slide in the short term.
“This slump is partly a reflection of weak demand from Europe and China, but it is mainly due to booming supply and has been compounded by dollar strength and panic selling,” research house Capital Economics said in a note.
“As such, the collapse in oil prices overstates the weakness of the world economy. And whatever the reasons for the fall, lower energy costs should actually help to kick-start global growth,” it added.
Energy research group Douglas-Westwood said investors will be watching an upcoming OPEC meeting in November.
“Will the group act in a disciplined manner and restrict output to support the benchmark price? Or will the members be driven purely by the desire to deliver as much volume to the market as possible?” it said in a note.
It added that “early signs are not good” after Saudi Arabia this month announced a large price cut, sparking fears of a price war among producers. (AFP)