Brent crude oil fell to a five-year low below $68 on Monday before recovering some of the losses as investors looked for a price floor after last week's OPEC decision not to cut production.
Both US crude and Brent have fallen for five straight months, oil's longest losing streak since the 2008 financial crisis, Reuters said in a report.
"The market is still very much in panic mode," said Energy Aspects' chief oil analyst Amrita Sen. "Once we get over the panic, Brent prices will probably stabilize at around $65-80 a barrel in the short term."
Brent hit a low of $67.53 a barrel, the lowest since October 2009, and was down 50 cents at $69.65 a barrel. US crude fell 50 cents to $65.65 a barrel, having slipped to an intraday low of $63.72, the lowest since July 2009.
Oil lost more than 12 percent after OPEC's decision last Thursday.
"The market is still looking for a new equilibrium below $70 (a barrel), which is slightly surprising given that with the current prices, much of the shale oil production in the US, or part of it, will be unprofitable," Commerzbank analyst Eugen Weinberg said, pointing to the potential impact on investment in shale oil in the US.
With oil prices losing about 40 percent since June, the impact is felt around the world as oil-producers from Iraq to Nigeria are revising 2015 budgets to reflect lower prices.
Iran refrained from protesting against OPEC's decision to retain its production ceiling to maintain group solidarity, even though the move will not benefit all members, Iran's oil minister said in local media reports.
Slower than expected growth in China's manufacturing sector may add further downward pressure on oil. China's official Purchasing Managers' Index (PMI) slipped to 50.3 in November, a government study showed on Monday, lower than analyst forecasts of 50.6.
"In the fourth quarter, oil markets have lost the support of both the invisible hand of the US Fed and OPEC," Petromatrix analyst Olivier Jakob said, referring to the Federal Reserve's move to phase out monetary stimulus for the US economy.
