Oil prices slipped more than $1 to below $59 a barrel on Monday, hitting their lowest in almost two months on concerns over the state of the global economy.
The market dropped 11 percent last week in their biggest weekly decline since late January as investors raised the possibility of another economic dip before any recovery, which could delay a rebound in demand for fuel.
Crude oil for August delivery was down $1.45 at $58.44 a barrel by 1403 GMT (10:03 a.m. EDT), after earlier falling to a low of $58.32, the lowest since May 18. London Brent was down 93 cents at $59.59.
Prices are falling today and will probably fall tomorrow and for the rest of the week because in the near term the economic fundamentals continue to be very weak, said Mike Wittner, global head of oil research at Societe Generale.
We are in a well entrenched downtrend and you need something distinctly bullish to pull out of it.
Wittner saw a target for U.S. light crude at around $55 per barrel and said prices could press on down toward $50.
Daniel Liu, strategist at MF Global in Singapore, said the oil price rally in June was clearly overdone.
We believe oil prices will see a further correction to fall to around $55, before they bounce up when confidence on the global economy returns to the market, Liu said.
Oil shot up 40 percent last quarter and touched an eight-month high of above $73 a barrel as investors shrugged off weak fundamentals and banked on swift global economic recovery.
Analysts at BNP Paribas said oil prices could see more corrections in the short term as external factors, including a weak U.S. dollar and rising equities which have helped oil's recent rally, set to reverse course.
Focus will shift back to oil fundamentals which remain weak -- oil demand will contract with the world economy, BNP's Harry Tchilinguirian said in a report.
Nigeria's main rebel group said on Monday it sabotaged a loading dock for oil tankers in Lagos state, the first in the area since the group began its latest campaign of violence against Africa's biggest oil producer.
The attack came as the government prepared to release Henry Okah, the suspected leader of the Movement for the Emancipation of the Niger Delta (MEND), after more than a year in detention for suspected arms dealing.
(Additional reporting by Fayen Wong in Perth; editing by Peter Blackburn)