Oil fell below $70 a barrel this afternoon, pressured by a gloomy outlook for the global economy that could limit the impact of any supply cuts OPEC might agree at a meeting on Friday.
Falls in European stock markets, plus the US dollar's rise to a 2-year high against a basket of currencies added to pressure on oil and other commodities.
US crude for December delivery was down $2.79 at $69.39 by 12.35pm. Last week the price fell to $68.57, its lowest since June 2007 and less than half a record high in July.
London Brent crude was down $2.35 at $67.37.
"People are just scared that the economy is going down the tube," said Tony Nunan, assistant manager of risk management at Mitsubishi Corp in Tokyo.
"There is a feeling that we are now going to see problems in the real economy; employment, real estate prices will continue to fall and the big concern now is how much economic growth is going to suffer."
Oil has been tracking downward moves in global equity markets, which have been reacting to increasing evidence of a global slowdown.
"The relationship between oil and equities could be tested by any decision by OPEC to reduce production at this week's meeting," said Frances Hudson, global thematic strategist at Standard Life Investments.
"But the current feeling is that falling demand will outweigh the impact of a production cut."
The price of oil has more than halved from a record high above $147 in July as the financial crisis has started to hit energy demand in the United States, the world's largest energy consumer, and other industrial countries.
The Organization of the Petroleum Exporting Countries called an emergency meeting this Friday, when the producer group is widely expected to agree to cut supply to defend prices.
Nigerian Oil Minister Odein Ajumogobia said today the OPEC member would be comfortable with oil at $80 a barrel, but a cut in its output was not in its best interests.
OPEC Secretary General Abdullah al-Badri has said that the world would face a huge oversupply of oil next year, if production continued at current rates.
Badri is in Moscow where he is due to meet Dmitry Medvedev, president of Russia, which is the world's second largest oil exporter after Saudi Arabia.