Oil dropped more than 3 percent on Monday, as worry about an economic slowdown spread after Standard & Poor's cut the United States' top-tier credit rating late on Friday.
Fear gripped financial markets as the fallout from the historic downgrade of the U.S. debt rating by S&P drowned out pledges of assistance from Europe's central bank and soothing words from the Group of Seven.
U.S. stocks tumbled early, tracking a sharp drop in global equity markets following S&P's move. .N
Brent crude fell $3.60 to $105.77 a barrel by 10:34 a.m. EDT, after earlier falling as low as $105.45. U.S. crude fell $3.42 to $83.46 after sliding to its lowest intraday level since November at $82.52 a barrel in early trade.
"In the tumultuous aftermath of the U.S. downgrade from S&P, the world also is downgrading the oil market," said Phil Flynn, analyst at PFGBest Research in Chicago.
Goldman Sachs said on Monday it maintained overweight recommendation on commodities and oil relative to other assets, although it added that risk to its constructive commodity views had risen.