U.S. crude prices sank a dollar to below $60 a barrel on Friday and were poised for their biggest weekly fall since January as traders focused on economic uncertainty.
The latest report from the International Energy Agency predicted an increase in oil consumption in 2010, but expected it to stay negative in 2009 and saw limited demand for OPEC crude.
U.S. light crude for August delivery was trading 92 cents a barrel lower at $59.49 a barrel by 1414 GMT, off a session low of $58.72 its lowest since mid-May.
London Brent crude was down 80 cents at $60.30 a barrel.
"The mood has changed and people are losing confidence about the economic recovery," said Simon Wardell at Global Insight. "We are in one of those phases where no matter what happens in other markets oil will go down."
Better-than-expected industrial output figures from some parts of Europe and Asia failed to steer prices higher.
European equities also stayed weak on Friday.
Oil rose to more than $73 at the end of June, its highest level this year, but since then the market has dropped more than $10 as expectations of a swift economic recovery faltered.
"While 2010 oil demand and economic activity figures are expected to show better-than-expected growth, the world is still in for recession in 2009 and that is hard to reconcile with a high oil price tag," said Harry Tchilinguirian of BNP Paribas.
"The oil market is beginning to focus again on its weak fundamentals."
Oil has fallen in six of the previous seven sessions. So far this week, prices have dropped nearly 10 percent, slightly less than an 11 percent weekly drop in January.
The latest wave of selling began after much worse than expected U.S. unemployment data on Thursday and has been sustained by a steady stream of negative economic news.
An announcement this week from U.S. regulator the CFTC that it was considering tighter controls on excessive speculation in the commodity markets added to the bearish mood, although analysts said it would take months to implement changes.
One supportive factor for the oil market has been disruption of supplies by militants in Nigeria. That has helped tighten OPEC supplies, although the group's discipline has declined to roughly 70 percent from an estimated peak of 80 percent of promised supply curbs earlier this year.
But some analysts thought news that Nigerian President Umaru Yar'Adua could be freed in the next few days after the revel leader welcomed the government's amnesty offer could lead to less frequent supply disruptions.
