The price of oil fell 9% on Tuesday after bleak economic data from the United States prompted concerns about demand, while a top US refiner announced it was cutting output.
US crude settled at $US41.58 a barrel, down $US4.15, or 9%, in the biggest percentage loss since 7 January. London Brent crude settled down $US3.23 at $US43.73 a barrel.
Top US refinery Valero said it was cutting refinery output and capital spending this year due to shrinking demand.
A survey released on Tuesday showed US consumer confidence had slipped to a record low in January, as governments around the world offered further help to banks and industries battered by the financial crisis.
Meanwhile, US home prices plunged a record 18.2% in November from a year earlier as the housing market remained in the throes of a deep recession, Standard & Poor's data showed on Tuesday.
The global economic crisis has weakened crude demand, especially in developed economies, and pushed prices off record peaks over $US147 a barrel struck in July.
