Global oil prices slid to new multi-year lows Monday after a top OPEC official suggested that speculation largely was driving the market lower, indicating the cartel would keep output unchanged.
US benchmark West Texas Intermediate for January delivery lost $1.90, closing on the New York Mercantile Exchange at $55.91, its lowest level since early May 2009.
The European benchmark, Brent North Sea crude for January delivery, settled at $61.06 a barrel in London, down 79 cents from Friday's closing level.
Oil staged a small rally in early European trading from steep losses last week but that quickly evaporated, roiling European stock markets.
Oil prices have plunged roughly 50 percent since June, weighed down by plentiful supplies, the stronger dollar and weak demand arising from the struggling global economy, according to analysts.
"The move in oil was shown to be a dead-cat bounce and prices rolled over and erased most stock market gains with them," said Jasper Lawler, an analyst at CMC Markets UK.
Lawler said "lower oil prices almost unequivocally boost demand in the longer term but the realization is setting in for markets that part of the reason prices are falling rapidly right now is because global demand is slowing."
On Sunday, Abdalla Salem el-Badri, the secretary general of the 12-nation Organization of the Petroleum Exporting Countries, hinted that speculation was behind the steep price declines.
"When we look at supply and demand, there is a rise (in supply) but only a modest one that should not have led to this 50 percent drop," Badri told reporters at a conference in Dubai.
"Speculation is strongly contributing to pushing prices down."
The OPEC oil cartel decided last month to maintain its current production level despite pleas by some producers to cut output in order to curb the price drop.
"The idea that the oil market will balance itself leaves the downside open, since it could well happen at a significantly lower price level," said Tim Evans of Citi Futures.