US oil prices sank below $50 a barrel on expectations of swelling stocks, as Opec members pumped at record levels.
Seasonal factors are helping ease pressure on oil prices
On Tuesday, New York's benchmark oil price fell almost 3% to $49.50 a barrel, with London's Brent crude closing down 1.1% at $50.52.
The trend could persist on Wednesday as the US puts out stock figures expected to show strong growth in oil supplies.
But overall prices remain close to record levels, which have raised fears of damage to the US and world economy.
The growth in supply, both in the US and from Opec, comes as the world's biggest oil markets head for the less thirsty summer season.
Opec members in particular, pledged to bump up production, are boosting output in preparation for when demand soars again late in the year.
"We are allowing inventory levels to build in anticipation of the heating season," said Adel Al-Jubeir, foreign affairs advisor to the Saudi government, in an interview with Reuters.
Following a promised production increase earlier this year, Opec now says that its 10 quota-bound members are pumping 29.7 million barrels a day, 2 million above their quota.
A slowing of demand from factories in Europe and the US has also helped moderate prices.
But one key factor in the 9% decline in US oil prices in the past week is growing concern about the health of the world economy.
Growth in the US proved slower at the start of 2005 than some had predicted, while an increase in US interest rates on Tuesday to 3% could also depress demand.