US crude West Texas Intermediate (WTI) were trading at $31.34 per barrel at 0805 GMT on Tuesday, down 7 cents from their last settlement and almost 19 per cent lower than at the beginning of the year. WTI has shed over 70 per cent in value since the downturn began in mid-2014.
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.
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 cut 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