Oil fell below 90 in quiet trade as US recession fears overshadowed reports of output shutdowns in Mexico and speculation Opec will not increase output next month.
In addition, a slightly stronger US dollar, which makes oil more expensive for holders of other currency, also weighed on oil.
Earlier this morning, New York's WTI crude for February delivery, which expires tomorrow, was down $1.16 at $89.41 a barrel. London's Brent crude for March delivery was down 92 cents at $88.31 per barrel.
US markets are closed today for the Martin Luther King holiday, although electronic trading is still open. Some analysts say this closure could be adding pressure to prices.
Oil has declined some 10 per cent since hitting an all time high of $100.09 on January 3rd as worries over the increasingly gloomy US economic outlook raised fears demand for crude might wane.
On Friday, President George W. Bush proposed a $150 billion stimulus package to help jump start the economy and prevent a recession, but market reaction to the news was mixed.