US benchmark West Texas Intermediate for November delivery was down five cents at USD 89.69. On Friday it closed below USD 90 for the first time since April 2013.
Brent North Sea crude eased 36 cents to USD 91.95, a two-year low. While output surges in the United States owing to oil shale extraction, exports are on the rise in Russia, Libya and Kurdistan.
Also, Saudi Arabia cut prices for the fourth straight month last week to defend its market share, suggesting it is unlikely to cut production any time soon. Both Brent and New York contracts have shed about 15 per cent in the past three months.
"Oil prices are likely to keep falling for the rest of the year as global supply is outstripping demand," said Tony Nunan, oil risk manager at Mitsubishi Corp. in Tokyo. "Supply of US shale gas alone can cover global demand this year, and unless OPEC countries reduce their production, or unless a fresh geopolitical concern occurs, the best estimate now is a bearish market," he added.
Also depressing prices is the stronger dollar, which surged Friday after the Labor Department said the US economy created 248,000 jobs in September and the jobless rate dipped to a six-year low of 5.9 per cent.
The news increased the likelihood the Federal Reserve will hike interest rates sooner than later. The greenback is sitting at six-year highs against the yen and two-year highs against the euro. A stronger greenback makes dollar-priced commodities more expensive for buyers using weaker currencies, which tends to dent demand and push prices lower.