U.S. crude West Texas Intermediate (WTI) was trading at $30.66 per barrel at 0531 GMT on Tuesday, down 75 cents from the last settlement and about 20 per cent lower than at the beginning of the year. Earlier it traded at $30.60, the lowest since December 2003.
Brent crude futures fell 83 cents to $30.72 a barrel. Earlier they declined to $30.66, their lowest since April 2004. Brent has fallen nearly 20 per cent in January and, like WTI, has declined on every day of trading so far this year.
Trading data showed that managed short positions in WTI crude contracts, which would profit from a further fall in prices, are at a record high, implying that many traders expect further falls.
"It's going to be a very interesting year in oil," said Ric Spooner, chief market analyst at CMC Markets in Sydney. "The lower the price goes, the faster in time we are likely to form a base and recover."
Analysts also adjusted to the early price rout in the year, with Barclays, Macquarie, Bank of America Merrill Lynch, Standard Chartered and Societe Generale all cutting their 2016 oil price forecasts on Monday.
"A marked deterioration in oil market fundamentals in early 2016 has persuaded us to make some large downward adjustments to our oil price forecasts for 2016," Barclays bank said.
"We now expect Brent and WTI to both average $37/barrel in 2016, down from our previous forecasts of $60 and $56, respectively," it added.
But it was Standard Chartered that took the most bearish view, stating that prices could drop as low as $10 a barrel.
"Given that no fundamental relationship is currently driving the oil market towards any equilibrium, prices are being moved almost entirely by financial flows caused by fluctuations in other asset prices, including the USD and equity markets," the bank said.
"We think prices could fall as low as $10/bbl before most of the money managers in the market conceded that matters had gone too far," it added.
© Thomson Reuters 2016