Analysts said crude was being hit by falling US consumption of petrol and heating oil in the face of high prices.
The cost of petrol and heating oil rose sharply after Hurricanes Katrina and Rita damaged US refineries.
A barrel of US light crude fell to two month lows of $1.29 to $61.50 after briefly dipping below the $61 level.
Meanwhile, in London trade, benchmark Brent crude sank $1.56 to close at $58.56 a barrel.
Crude prices are now considerably lower than in August when they reached a record high of $70.85 a barrel in the aftermath of Hurricane Katrina.
"A lot of people are concerned about demand weakness," said oil analyst Tony Nunan, manager at Mitsubishi Corporation's international petroleum business.
Mr Nunan said the US government's pledge earlier this week that it was prepared to release some of its emergency heating oil reserves this winter had also helped to reduce crude prices.
A dozen US oil refineries damaged by Katrina and Rita remain shut. US Energy Secretary Sam Bodman said it could take up to a month for them to reopen because of delays in reconnecting electricity supplies.
