The decline also came as investors anticipated the results of a meeting of the US central bank's top policymakers on further measures to perk up the world''s biggest economy.
Weakness in the US and Europe -- two of the world's major economic growth engines -- has been weighing down on global markets.
New York's main contract, WTI light sweet crude for October delivery, was down 53 cents to USD 86.39 a barrel in morning Asian trade, and Brent North Sea crude for November dropped 37 cents to USD 110.17 a barrel.
Prices had bounced back overnight but the rally was brief amid persistent concerns over a possible debt default by Greece which could send shockwaves across global financial markets.
Greece on Tuesday sought to convince the EU and IMF that its economic programme is back on track to unlock eight billion euros in rescue funding needed to prevent it running out of cash next month.
"Nervousness is running high given the uncertainty surrounding the release of the next tranche of money for Greece (which is) still part of the first bailout package," DBS Bank said.
"Latest signs are that Greece would announce further structural reforms and reductions to size of its bloated public sector in exchange for the next tranche and more time to implement austerity."