The February contract fell 8 percent on Monday, or $3.24, to settle at $37.59 after Alcoa Inc., the world's third-largest aluminum company, reported a quarterly loss of $1.19 billion.

Alcoa, the first component of the Dow Jones industrial average to post results, said last week it plans to lay off about 13 percent of its global work force by the end of 2009 amid sinking prices and demand for the metal.

The Dow fell 1.5 percent Monday and has dropped 3.5 percent this year.

"The negative sentiment we're seeing reflects the broad international macroeconomic outlook, which is considerably weaker, and what that means for energy consumption," said Moore.

Prices have fallen despite continued fighting between Israel and Hamas in Gaza. After initially spurring a jump in oil prices, the Gaza conflict has been largely ignored by traders because it hasn't affected major supplies and no oil-rich Middle East neighbors have become directly involved.

"The impact on oil supply is obviously limited," Moore said.

Investors are also looking for signs that demand from emerging markets, which helped drive oil's rise to $147.27 a barrel in July, will rebound.

"Growth concerns will dominate for the next few months," said Robert Prior-Wandesforde, co-head of Asian economic research at HSBC in Singapore. "Commodity prices will start to improve as sentiment about China and India starts to turn later this year."

In other Nymex trading, gasoline futures rose 2.98 cents to $1.1139 a gallon. Heating oil advanced 3.56 cents to $1.5080 a gallon while natural gas for February delivery slid 7.7 cents to $5.465 per 1,000 cubic feet.