Prices settled down 3 percent, a seventh straight daily decline for oil. Traders have all but given up attempting to predict where the new-year rout will end, with momentum-driven dealing and overwhelmingly bearish sentiment engulfing the market. Some analysts warned of $20 a barrel; Standard Chartered said fund selling may not relent until it reaches $10.

By Tuesday, the crash had become almost self-fulfilling, with speculators too afraid to buy for fear of being burned by another false bottom. The slide appeared to first accelerate when it broke below the $32 area around 9 a.m. EDT (1400 GMT).

The $30 mark is both a psychological and financial threshold. In recent days, traders have poured money into $30 put options for expiration in February and March. Hedging activity usually picks up as oil prices near big a options level, as buyers and sellers defend their interests. More than 15,000 contracts traded on Tuesday and 18,000 contracts traded on Monday for the February contract, more than doubling Friday's volumes.

U.S. West Texas Intermediate crude(WTI) CLc1 fell 97 cents to settle at $30.44 a barrel, a 3.1 percent loss, after touching a low of $29.93, which was last seen in December 2003.

"The momentum is too strong to the bearish side, even if fundamentally nothing has changed," said Dominick Chirichella, a senior partner at Energy Management Institute.

With prices now below break-even costs for many producers, particularly in the once-thriving U.S. shale patch, and the costly Canadian oil sands producers barely making $15 a barrel, an extended slump has caused financial pain to flare across the world, threatening corporate bankruptcies and fiscal strain.

Benchmark Brent crude LCOc1 fell 69 cents settle at $30.86, after bottoming at $30.34.

Prices firmed early in the day after a deadly suicide bombing rocked central Istanbul and Nigeria's oil minister said a couple of Organization of the Petroleum Exporting Countries members had requested an emergency meeting.

 

(Reuters)