Oil prices touched three-month lows of $118 a barrel on Tuesday as traders reacted to news of rising supplies.
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OPEC to meet June 22 ... crude fell as low as $118 a barrel, before recovering to trade at $119.13.
Brent crude fell by $2.20 to $118.48 a barrel.
Prices extended Monday's declines after it appeared that storms in the Gulf of Mexico were unlikely to hit output.
A Reuters survey also found that supply from oil producer group Opec had risen for the third month in a row in July.
The increase in Opec supply was mainly due to Saudi Arabia raising output.
Weak US consumer spending figures released on Monday also increased expectations that demand for fuel in the US could drop.
Analysts said that many investors were now focusing more on the potential imbalances between supply and demand on the oil market, and were looking at moving cash from oil and putting it in other assets.
"Most of the hedge funds have been taking profits," said Angus McPhail of British-based investment firm Alliance Trust.
He added that prices could fall to "about $100 within the next month if you keep on getting weak demand data".
(BBC)
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