New York's benchmark light sweet crude contract for delivery in January dropped $US3.73 to close at $US50.77 a barrel.
In London, Brent North Sea crude for January settled at $US50.35, a drop of $US3.58.
Mike Fitzpatrick at MF Global said trading was characterised by high volatility, with much hesitation about the direction of the economy and energy demand.
"Neither shorts or longs are comfortable with the current level. Fear of further falls is in equal proportion to anxiety over missing the start of the next rally,'' he said.
Mr Fitzpatrick said markets had largely priced in data showing a 0.5 per cent drop in US economic activity in the third quarter, revised from an earlier estimate of a 0.3 per cent decline.
"The force of the rationale behind the precipitous drop in oil prices from the mid-summer peak has been the contraction of demand,'' he said.
"Now participants must decide whether momentum will gather or this is the news that reverses the rumour's anticipation, as the old trading maxim predicts. If one accepts that a recession is already under way, as most economists do, recovery should begin some time next year. It would not be a leap of faith then to conclude that a bottom for oil prices is near, and may have already been struck.''
Oil prices last week slumped below $US50, reaching their lowest levels for almost four years in London, as the market worried that a global recession will severely hit energy demand.
They have dropped two-thirds since striking record high points of above $US147 in July, when fears of supply disruptions sent them rocketing.
Overnight, meanwhile, major oil producer Russia said it would coordinate strategy with the Organisation of Petroleum Exporting Countries (OPEC), which pumps 40 per cent of the world's crude.
Russian Energy Minister Sergei Shmatko, who was in India for a meeting of Central Asia republics, said Moscow had not ruled out a cut in production to help maintain prices.
"OPEC is discussing measures to protect the current oil market,'' Mr Shmatko told the conference, speaking through a translator.
"Russia will coordinate with OPEC to defend its interests ... and work out protection measures,'' he said.
Russia, one of the world's largest producers of oil and gas, is not a member of OPEC. The cartel is to hold an extraordinary meeting on Saturday in Cairo amid speculation that member nations will agree to cut output again in a bid to boost plunging oil prices.
Meanwhile, worries about a reduction in energy demand intensified yesterday as the OECD forecast that the rich developed countries were plunging into the worst economic downturn in decades.
Eight million more people will be out of work by 2010, the Organisation for Economic Cooperation and Development warned in a report quantifying the impact of the global financial crisis on 30 countries over the next two years.
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