Investors are worried about slowing demand for crude oil
Oil prices have fallen to their lowest levels since January 2007, amid fears over lower energy demand and worsening economic prospects.
US light sweet crude fell $3.50 to $56.16 a barrel on Wednesday. Brent crude dropped $3.34 to $52.37 a barrel.
Global oil prices have now fallen about 60% since peaking at an all-time high of $147.27 a barrel back in July.
Investors had hoped for solid growth in oil demand from China, but it has been weakening there, as well as in the US.
"We have a pretty good idea that global growth is going to be pretty awful next year and probably not much better in 2010," said Mark Pervan, senior commodity strategist at ANZ Bank in Melbourne.
Most analysts predict that the US Energy Department will report on Thursday that US oil inventories have risen for the seventh week in a row, highlighting falling demand.
Analysts also expect the International Energy Agency (IEA) to cut its global oil demand forecast in its report to be published on Thursday.
"With definitive slowing in China, the market is even more sensitive to negative economic news out of the US and Europe," Mr Pervan added.
Opec president Chakib Khelil said on Wednesday that the international oil cartel would "have to take a further decision on a cut in supply" if oil prices continue their fall.
At the same time, the International Energy Agency (IEA) says the era of cheap oil is over and prices could soon be back up to $100 a barrel.
The IEA, in its World Energy Outlook for 2008, says prices could soar to as high as $200 a barrel by 2030.