Oil prices sank below 89 dollars in Asian trade on Tuesday as jitters over an expected interest rate hike by the Chinese central bank scared traders, analysts said.
New York's main contract, light sweet crude for delivery in January, slid 50 cents to 88.88 dollars per barrel.
Brent North Sea crude for January delivery fell 44 cents to 91.01 dollars.
"The whole market is reacting on the downside because the Chinese central bank may be raising interest rates this weekend," said Serene Lim, oil and gas analyst for ANZ bank in Singapore.
"That's weighing the markets because any raise in the interest rates... would lead to slower economic growth and oil demand growth," Lim added.
The official China Securities Journal Tuesday quoted unnamed analysts as saying the probability of a hike in the interest rates of the world's biggest energy consumer in the near term was "very great."
The paper also said the days before and immediately after this weekend were a "sensitive window" for interest rate hikes, with China releasing its consumer price index (CPI) for November next Monday.
Analysts widely expect November's CPI to remain elevated after figures released last month showed October's index hitting a two-year high.
"The continued rise of the CPI has increased the pressure for an interest rate hike," the China Securities Journal reported.