Around 1000 GMT, Brent North Sea crude for July shed $0.69 from the night before to $98.16.
In early New York trade, West Texas Intermediate (WTI) crude for July slid $0.25 cents to $83.73.
The drops came after a survey showed eurozone private sector activity had suffered its worst monthly slide in nearly three years in May with "alarmingly steep" declines in Spain, Italy and now also France.
The full Purchasing Managers Index (PMI) compiled by the London-based research firm Markit fell to 46.0 points in May, from 46.7 in April in what amounted to the fastest rate of decline since June 2009.
The final figure was a shade better than an analyst estimate of 45.9 points but the results showed that German output fell for the first time since November and that downturns in France and Spain had accelerated.
Finance ministers of the Group of Seven and other economic powers meanwhile were to talk by phone later Tuesday on the eurozone crisis and the situation faced by weak European banks.
Concern has mounted that some Spanish banks could collapse without direct aid from Europe.
Spanish Budget Minister Cristobal Montoro warned Tuesday it was technically impossible to rescue the debt-laden economy, the fourth largest in the eurozone.
Analysts warn that the size of the economy would stretch the resources of existing European rescue mechanisms.
