The West Texas Intermediate for January delivery slumped 3.33 USA dollars to settle at 53.43 dollars a barrel on the New York Mercantile Exchange, while Brent crude for January delivery plunged 4.26 dollars to close at 62.53 dollars a barrel on the London ICE Futures Exchange.
Michael Burns, oil and gas partner at law firm Ashurst, said: "If you had suggested two months ago that the oil price would sit around $66 per barrel (Brent), I think most people would have been very surprised".
Portfolio managers have sold the equivalent of 553 million barrels of crude and fuels in the last seven weeks, the largest reduction over a comparable period since at least 2013. The worldwide benchmark fell as much as 7.6 per cent to $61.71, the lowest since December 2017.
Tuesday's drop extended a slide that has been largely unimpeded since early October.
Crude markers in NY and London have both fallen more than 25% from their October highs on concerns over a supply glut after the USA granted waivers to some buyers of Iranian oil despite sanctions.
"For the time being it's more about risk", said Jim Ritterbusch, president of Ritterbusch and Associates.
US West Texas Intermediate (WTI) crude futures, were up 70 cents, or 1.3 per cent, at US$54.13 a barrel.
The S&P 500 index hit a three-week low on Tuesday as weak results and forecasts from big retailers fanned worries about holiday season sales, while tech stocks continued to slide on concerns about iPhone sales.
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Trump said he won't let the murder of journalist Jamal Khashoggi jeopardize US relations with the Saudis as oil prices may "go through the roof" if the partnership between the two nations breaks.
USA investment bank Goldman Sachs said on Wednesday the renewed price collapse reflected "concerns over excess supply in 2019..."
Oil markets have been concerned about potential supply disruptions amid heightened tensions between the United States and Saudi Arabia over the killing of Khashoggi.
A report from the industry-funded American Petroleum Institute offered a bullish note for oil investors, finding that USA crude stockpiles fell 1.55 million barrels last week, according to people familiar with the data.
The notion in some quarters that it's virtually impossible to predict with any certainty where crude will go next was reinforced by Fatih Birol, executive director of the International Energy Agency, who on Tuesday said "We are entering an unprecedented period of uncertainty in oil markets" due to geopolitical instability and a fragile global economy.
Later today, the American Petroleum Institute will release its weekly oil report.
"While the news that OPEC+ said it would cut 1.4 million barrels of oil per day from production, it's looking likely that the cuts will have to be deeper in order to stabilise the price".
The Organization of the Petroleum Exporting Countries is pushing for a supply cut of 1 million to 1.4 million bpd when it meets on December 6.