US benchmark West Texas Intermediate for January delivery fell 24 cents to $55.67 while Brent crude for January eased 22 cents to $60.84 in mid-morning trade — both contracts at levels not seen since mid-2009.
WTI tumbled $1.90 Monday and Brent dipped 79 cents.
Crude prices have plunged roughly 50 per cent since June, weighed down by plentiful supplies, the stronger dollar and weak demand arising from the struggling global economy, according to analysts.
News that HSBC’s index of Chinese manufacturing activity had shown contraction also weighed on prices.
“While the US and the world as a whole will benefit from lower oil prices, there is a concern that those who lose out may be hit so hard that the fallout from their problems will outweigh the more diffuse benefits to the winners,” research house Capital Economics said in a commentary.
The London-based firm said the plummeting prices could force oil producers to cut spending and investment, hurting global demand.
It added that the fallout could also be “geopolitical in nature” as “regimes dependent on high oil prices look for distractions from social unrest at home”.
On Monday, stocks in Argentina dived more than eight percent, dragged by plummeting oil company shares.
Focus will now turn to a two-day meeting of the US Federal Reserve that begins later Tuesday, with investors looking for clues about when it plans to raise interest rates.