Oil fell below $65 a barrel on Thursday, extending its 7 percent overnight drop, weighed down by a strengthening dollar and as dismal economic data in the United States sharpened fears of a deep and lasting global recession, reported Reuters.
Growing U.S. fuel stockpiles, which underscored slackening oil demand, and a sharp slide in Asian stocks also helped pull oil prices lower.
U.S. light crude for December delivery fell 65 cents to $64.65 a barrel by 0455 GMT, around 4 percent above last week's 17-month low of $61.89, after having shed $5.23 to settle at $65.30 on Wednesday.
London Brent Crude fell 72 cents to $61.15.
"The U.S. dollar and Asian stock markets are weighing on oil. The outlook is still very bearish and the set of U.S. economic data over the next few days may push oil prices lower," said Clarence Chu, a trader at Hudson Capital Energy in Singapore.
On Thursday, the euro and sterling fell against the dollar, pressured by expectations that the European central bank and the Bank of England will cut interest rates to save their economies from further deterioration.
The initial euphoria of Election Day in the United States dissipated swiftly, as Democrat Barack Obama's first day as president-elect was marked by reports of deep cuts in employment by private employers, bringing worries about a weakening global economy back to the fore.
Growing fears of a protracted global recession also dragged down Asian stocks on Thursday, with Japan's Nikkei average sinking more than 5 percent, while Hong Kong's Hang Seng index and South Korea's benchmark KOSPI both shed around 6.4 percent.
Analysts said traders will be eyeing news of key U.S. economic indicators, including a government report on weekly jobless claims due on Thursday at 1330 GMT and Friday's unemployment data, to gauge how the economy of the world's largest oil consumer is faring.
Reports released overnight showed U.S. employers have cut 157,000 private sector jobs last month, while the service sector contracted sharply as the worst financial crisis in 80 years hammered the world's largest economy. News that investment bank Goldman Sachs planned to lay off another 3,200 employees and bellwether finance company GMAC reported a $2.52 billion loss for the third quarter added to the gloom.
U.S. gasoline stocks rose by 1.1 million barrels last week, against analyst forecasts of a draw, as demand for the fuel fell 2.3 percent over a four-week period to October 31, the Energy Information Administration said.
The EIA said it expected OPEC production to be cut by 1.1 million barrels a day (bpd) by January, which would represent about 70 percent of the cut of 1.5 million bpd agreed by OPEC last month and would be higher than the usual 50 percent compliance with previous cuts. U.S. crude oil output in the Gulf of Mexico rose, with 246,103 barrels per day, or 18.9 percent of U.S. production there, still shut on Wednesday, versus 27.7 percent on October 30 as energy companies continue to restore operations after September's hurricanes.