Crude futures has plunged with U.S. oil dropping more than 3% on a firmer U.S. dollar and festering worries over a global supply surplus, on Monday, 23 November.
The fall was part of a wider decline in commodities that has also been stoked by worries over faltering demand from China, with prices for base metals such as copper and nickel tumbling.
U.S. crude's West Texas Intermediate (WTI) January contract CLc1 had fallen $1.16, or 2.77%, to $40.74 a barrel by 0740 GMT. It hit $40.59 earlier in the session, near levels seen on Friday, 20 November, before the December contract expired.
Benchmark front-month Brent futures for January LCOc1 lost 80 cents, or 1.79%, to $43.86 a barrel, recovering from a session-low of $43.69.
"With the stronger U.S. dollar, all of copper, gold and oil fell after Asian trading began ... there were also some selloffs which were not made last Friday," said Kang Yoo-jin, commodities analyst at NH Investment and Securities in Seoul.
Kang said in a separate note that oil markets would only rebound if U.S. crude inventories dropped, although declining U.S. output and seasonal demand would offer some support at low prices.
The euro hit a seven-month low versus the U.S. dollar on Monday, with a stronger greenback making dollar-denominated oil contracts more expensive for holders of other currencies.
But Daniel Ang at Phillip Futures noted that a string of U.S. economic data this week could test the dollar's strength, which has also seen it mark a seven-month high of 99.977 .DXY against a basket of currencies.
"With the U.S. dollar index hovering near 100, we expect to see slightly more downside than up. This would mean that oil prices should be holding steady this week and should mean that supports of $40 and $43 for WTI and Brent January 2016 should hold."
The U.S. crude December futures CLZ5 that expired on Friday ended 15 cents down at $40.39 after hitting a low of $38.99, the cheapest since 27 August.
Meanwhile, Venezuela's oil minister said on 22 November that OPEC cannot allow an oil price war and must take action to stabilise the crude market soon. When asked how low oil prices could go in 2016 if OPEC doesn't change its policy, he said, "Mid-20s."
BMI Research, part of the Fitch ratings agency, said: "What is underway now is a structural market rebalancing in which low oil prices clear out high cost production - a relatively small part of which is U.S. shale. It is not the result of OPEC policy, but of the basics of supply and demand."
Oil markets were keeping an eye on developing geopolitical tensions in the Middle East as Jordan's King Abdullah will hold talks with Russian President Vladimir Putin on how to tackle "terror groups" led by Islamic State (IS) in Syria, an official source said.
