Crude slumped nearly $2 as concerns about the growth of the global economy weighed on sentiment.
Investors contemplated comments from OPEC, who said demand will drop this year because of the economic problems.
Consumption of OPEC crude in 2009 will fall 20,000 barrels to 85.66m barrels a day, taking the combined year’s reduction to 180,000 barrels a day.
"The considerable uncertainty about the course of the (economic) recovery implies the potential for further deterioration in world oil demand growth this year," OPEC said in the report.
U.S. crude for February delivery settled down $1.88 to $35.40 a barrel.
Gold prices slipped $1.50 to $807.30 an ounce as the dollar rose against other currencies and the appeal of the precious metal waned.
Dollar rose against the Euro after the European Central Bank cut its benchmark interest rate by half a percentage point to 2%.
