Crude oil for January delivery ended down $2.32 to $46.96 a barrel on the New York Mercantile Exchange, the lowest closing level since May 20, 2005.
Crude's loss on Tuesday followed a 9.4% slump in the previous session, the biggest percentage decline in more than seven weeks. Oil is now 68% lower than its record high of nearly $150 a barrel hit in July.
"Markets are increasingly concerned that the worldwide economic decline is too pronounced to be fixed any time soon and a worldwide recession will curtail energy demand," said analysts at Action Economics.
The U.S., the biggest oil consumer in the world, first entered a recession in December 2007, the National Bureau of Economic Research, which tracks economic cycles, said on Monday.
Oil demand could see an outright contraction of 0.5% next year as the global economy falls into recession, analysts at Merrill Lynch said in a report released late November.
Investors "cannot get over the weak global economic numbers," said Phil Flynn, vice president at Alaron Trading.
The U.S. Energy Information Administration is slated to report last week's petroleum inventories data Wednesday. Analysts surveyed by energy information provider Platts expect a 2 million barrel buildup in crude stockpiles.
They also expect a 1.1 million barrels buildup in gasoline inventories and a 900,000 barrels increase in distillate stocks.
Last Wednesday the EIA reported U.S. crude inventories rose 7.3 million barrels in the week ended Nov. 21.
OPEC
The Organization of Petroleum Exporting Countries, which controls about 40% of the world's oil production, ended a weekend meeting in Cairo without any decision on a production cut. The cartel will meet next on Dec. 17 in Oran, Algeria.
OPEC President and Algerian Oil Minister Chakib Khelil said he expects oil demand to decline from a month ago and said the group would take necessary action at the next meeting.
OPEC Secretary General Abdalla Salem El Badri said Monday that crude prices in the range of $70 to $90 a barrel would be "very reasonable."
"Incredibly, the grim global macro backdrop is not stopping various OPEC producers from throwing out 'fair' numbers for their oil, with prices between $70 to $90 being bandied about," said Edward Meir, an analyst at MF Global, in a research note.
"The cartel would do well now to lower its sights to more realistic targets, and perhaps start thinking about living with $30-$40 oil," Meir said. "This is now a distinct possibility given the unprecedented global slowdown that has yet to fully manifest itself."
Also in energy trading, January reformulated gasoline dropped 4.8% to $1.0583 a gallon and January heating oil slid 2% to $1.5832 a gallon.
January natural-gas futures fell 2.7% to $6.424 per million British thermal units.
