The price of oil plunged more than 9% percent to below $US50 a barrel on Monday after OPEC deferred a decision on new supply cuts at a meeting over the weekend.
The producer group delayed a decision on output until later this month as Saudi Arabia and other Gulf members called for greater compliance with existing cuts agreed to since September to help stem oil's fall from highs over $US147 a barrel struck in July.
US crude traded down $US4.95 at $US49.48 a barrel by 2:26pm EST, while London Brent crude fell $US5.41 to $48.08 a barrel.
OPEC secretary general Abdullah al-Badri said the cartel is ready to cut production by a significant amount when the group next meets on 17 December in Algeria. He has said the market is oversupplied.
Saudi Arabian Oil Minister Ali al-Naimi told Saudi-owned al-Hayat newspaper that OPEC would not need to make a further cut in oil supply when it meets in Algeria if producers comply with previous curbs and fuel stocks decline.
The group has agreed to trim two million barrels per day from production since September.
Saudi Arabia over the weekend said $US75 a barrel would be a "fair" price for oil, the first time in years that the world's biggest exporter has identified a target for crude prices.
Surging demand from emerging economies sent oil and other commodities on a six-year rally, but prices have tumbled since July as the economic crisis erodes demand in the United States and other big developed consumer nations.
Federal Reserve Chairman Ben Bernanke warned on Monday that the US economy remained under considerable strain and said policy-makers must be ready to take decisive action to protect jobs and growth.