Oil prices on Thursday sank beneath $55 per barrel for the first time since 2005, due to a milder-than-expected winter in the United States which has sapped demand for heating fuel, traders said.
New York's main contract, light sweet crude for delivery in February, slid 19 cents to $55.40 in US floor trading.
The contract earlier slumped to $54.90 in electronic deals - the lowest level since June 14, 2005.
In London, Brent North Sea crude for February delivery lost 22 cents to $54.89 in electronic trade, after earlier touching $54.50, which was last seen on November 30, 2005.
Oil futures have fallen about 9.0 per cent since the start of 2007.
"Expectations of a continuing mild US winter have sapped expected demand for heating fuel," Sucden analyst Michael Davies said on Friday.
"There was also talk of funds bailing out of the market after suffering heavy losses recently."
Crude prices have tumbled since the start of the New Year as unseasonably warm US weather curbs demand for heating oil in the northeast United States, the world's most energy-hungry region.
The slump has extended from the end of last year despite efforts by the Organization of the Petroleum Exporting Countries (OPEC) to cut production to support prices.