OIL fell below $US46 a barrel after White House officials warned at the weekend that the US recession would worsen, undermining demand for crude.
Crude for March delivery fell US70c to $US45.77 ($70.20) a barrel.
The economy in the US, the world's largest consumer of crude, would "get worse before it gets better", the Vice-President, Joe Biden, said, dampening expectations that a massive government stimulus package would spur growth.
Congress is working on a $US825 billion plan - about two-thirds new government spending and the rest tax cuts - that is hoped will create as many as 4 million jobs.
Weak global demand for crude would continue to weigh on prices, said Clarence Chu, a trader at Hudson Capital Energy in Singapore.
US crude inventories have soared in the past three weeks, a sign that drivers are cutting spending in the worst recession in decades.
"The demand isn't there yet, and I don't think it will come back until the second half of 2009," Mr Chu said.
"Unless there is a geopolitical event or some very positive economic news, oil should drift down to the $US35-$US40 range."
Investors will be looking to US earnings results this week for signs of the economy's health. Hundreds of large companies will issue reports, including Procter & Gamble, Kimberly-Clark and Starbucks.
Crude oil investors often use the equity market as a gauge on sentiment about the economy. Oil has fallen about 69 per cent since peaking at $US147.27 a barrel in July.
The Dow Jones fell 2.5 per cent last week. "If the Dow falls 300 points, crude is going down too," Mr Chu said.
