U.S. futures were on track to close lower for a record 12th straight session, with Tuesday's selloff the worst yet. More than 830,000 contracts had changed hands as of 1:45 p.m. EST (1845 GMT), as funds shed positions with oil dropping to December 2017 lows.
"It's like a run on the bank," said Phil Flynn, analyst at Price Futures Group in Chicago. "It's getting to the point where it doesn't seem to be about fundamentals anymore, but a total collapse in price."
Oil prices were hit on Monday after U.S. President Donald Trump put pressure on the Organization of the Petroleum Exporting Countries not to cut supply to prop up the market. That came after reports that Saudi Arabia was considering a production cut at the December OPEC meeting, on increased alarm that supply has started to outpace consumption.
"Twelve days in a row is insane - but there are a lot of pieces putting pressure on the market," said Bob Yawger, director of energy futures at Mizuho.
He said emerging concerns about weak global demand, rising U.S. production, and speculators rapidly bailing out of long positions were primary factors for the drop.
U.S. crude futures lost $3.59, or 6 percent, to hit $56.35 a barrel, lowest since December 2017, as of 1:45 p.m. EST (1845 GMT), putting it on track for its largest one-day percentage loss since January 2016.
Brent dropped $4.03, or 5.8 percent, to $66.09 a barrel.
Both benchmarks have fallen more than 20 percent since peaking at four-year highs in early October.
In its monthly report, OPEC said world oil demand next year would rise by 1.29 million barrels per day, 70,000 bpd less than predicted last month and the fourth consecutive forecast cut. Output, however, rose by 127,000 bpd to 32.9 million bpd, OPEC said.
"OPEC lowered its demand forecast, and that gives them cover for cutting production," said Flynn.
Saudi Energy Minister Khalid al-Falih said on Monday OPEC agreed there was a need to cut oil supply next year by around 1 million barrels per day (bpd) from October levels to prevent oversupply.
Even as the Saudis floated the possibility of a cut in production, the selling has not abated.
Mizuho's Yawger noted that the potential pullback in Saudi output has in part already been made up by the sharp bump in U.S. production, which reached 11.6 million bpd in the most recent week, a new record. In addition, Russia has given mixed signals about a cut, with Lukoil CEO Vagit Alekperov saying Monday he did not see cuts being necessary.
"They can't make up their minds on a cutback or not," said Yawger. "These strange bedfellows no longer seem like they're in the same bed anymore."
Trump on Monday said he hoped OPEC will not cut production, making it clear he wants oil prices to fall.
The steep decline has occurred as speculators have pulled back on their heavy bets on oil. Hedge funds and other money managers have reduced their long position in oil contracts to their lowest since August of 2017 last week.
(Reporting by David Gaffen in New York; additional reporting from Christopher Johnson in LONDON and Henning Gloystein in SINGAPORE Editing by Susan Thomas and Marguerita Choy)
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)