The downward momentum appeared to overshadow concerns traders had about a possible strike in oil-rich Nigeria and a new setback to Russian oil giant Yukos, which was reportedly hit with $10 billion in new tax claims Monday.

December crude futures declined by $1.63 to settle at $50.13 a barrel on the New York Mercantile Exchange - the lowest closing price since Oct. 4, at $49.91 a barrel. Prices had fallen as low as $49.30 a barrel in intraday trade. In London, December Brent crude futures fell $1.92 to $47.06 a barrel.

"We could move a couple of bucks more on the downside," BNP Paribas Futures trader Tom Bentz said.

Bentz added that worldwide oil supplies remain tight and that, therefore, "I'd be a little cautious" about declaring the beginning of the end of high prices. "The reality is that not a lot has changed fundamentally," he said.

Aaron Kildow, a broker with Prudential Financial Inc. in New York, said Monday's slide was magnified by selling among institutional investors, such as mutual funds, who had to cover earlier bets that prices would rise. Kildow also said that a burst of warm weather in the Northeast may have influenced market psychology.

December heating oil futures plummeted 5.65 cents to $1.4076 a gallon on Nymex, where gasoline futures fell 3.77 cents to $1.2908 a gallon. Natural gas for December delivery dropped 0.5 cent to $8.720 a 1,000 cubic feet.

Last week, oil prices fell from record closing prices on Nymex after the Energy Department said U.S. crude supplies had increased by 4 million barrels to 283.4 million barrels - roughly double what Wall Street was expecting. Also, data maintained by the Minerals Management Service showed a significant recovery in industrywide oil and natural gas production in the Gulf of Mexico, where operations have been snagged since mid-September due to Hurricane Ivan.

That the market chose to focus last week on rising oil supplies instead of shrinking heating oil inventories suggested a shift in traders' psychology.

China's move to cool its red-hot economy by raising interest rates also eased pressure on oil prices.

While crude prices are still up by more than 70 percent from a year ago, they would need to surpass $90 a barrel to approximate the all-time high, in inflation-adjusted terms, of 1980. A record Nymex closing price of $55.17 a barrel was hit Oct. 22 and matched Oct. 26.

Underlying the supply fears is the world's narrow cushion of excess capacity, currently at about 1 percent of the global daily consumption of 82.4 million barrels.