USA crude futures lost $3.59, or 6 per cent, to hit $56.35 a barrel, lowest since December 2017, as of 1:45 p.m. EST (1845 GMT), putting it on track for its largest one-day percentage loss since January 2016.
Brent futures for January settlement fell 59 cents to $69.53 a barrel on the London-based ICE Futures Europe exchange.
Saudi Arabia is considering pushing through curbs on crude at next month's Opec meeting, on signs that supply is starting to outpace demand. Brent crude is trading below $70 per barrel, down from a four-year high above $86 per barrel in early October.
The Organization of the Petroleum Exporting Countries (OPEC) has been watching the jump in supply and price slump with concern.
It said that it expected "subdued global economic growth" to drive demand even lower than Opec was now forecasting.
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The Energy Information Administration reported a huge crude oil inventory build for the week to November 9 of 10.3 million barrels, arresting an improvement in oil prices that started yesterday after a sharp drop earlier this week.
The U.S. dollar also put pressure on oil, hovering near 16-month highs and so making oil more expensive for importers using other currencies.
In the report, OPEC said its oil output rose further in October by 127,000 bpd to 32.90 million bpd after the June deal.
"OPEC and Russian Federation are under pressure to reduce current production levels, which is a decision that we expect to be taken at the next OPEC meeting on December 6", said Andersson.
The agency raised its forecast for oil output growth from countries outside the OPEC to 2.4 million bpd this year and 1.9 million bpd next year. Meanwhile, Saudi Arabia unveiled a plan over the weekend to reduce its shipments by about 500,000 barrels a day next month. So far, two rounds of auctions have been held during which a collective of at least 1.4 million barrels of oil have been sold to worldwide clients.
United States crude oil output from its seven major shale basins is expected to hit a record of 7.94-million barrels a day in December, the U.S. department of energy's Energy Information Administration (EIA) said on Tuesday. Oil is priced in dollars and the USA currency has been strong of late.