Light, sweet crude for November delivery was down $4.35 to $82.24 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore, the lowest since October 2007. The contract overnight fell $1.81 to settle at $86.62.
"The whole market has lost confidence in everything," said Mark Pervan, senior commodity strategist with ANZ Bank in Melbourne. "Everyone is worried about global growth, and oil is the front line commodity for that. There's just a lot of panic and fear in the market."
Investors have been unimpressed by interest rate cuts by the U.S. and other leading central banks this week to help unclog the credit markets and promote lending. A credit crisis that began last year in U.S. sub-prime mortgages has spread across the globe, forcing governments to spend hundreds of billions of dollars to bail out banks, brokerages and insurance companies.
Japan's benchmark Nikkei 225 index plunged more than 10 percent Friday while the Dow Jones industrial average fell more than 7 percent Thursday to its lowest level in five years.
"The problem is no one really knows how far and deep this will go," Pervan said. "But we can see from the size of the rescue packages, this is a really serious deal. This isn't a normal bear market."
Oil investors even ignored signs that the Organization of Petroleum Exporting Countries may cut production. OPEC said Thursday it will hold an extraordinary meeting Nov. 18 to discuss how the widening global financial crisis is affecting oil prices.
On Thursday, the head of Libya's national oil company, Shukri Ghanem, called on oil producing nations to cut output.
"OPEC is trying to jaw-bone the price up, but they'll have to come into the market because no one is going to be believe just jaw-boning with the market sliding so quickly," Pervan said. "The market is so demand focused, it doesn't even care what happens to supply."
OPEC's decision last month to cut production by 520,000 barrels a day failed to halt the losses, which have accelerated in recent days.
Oil prices have fallen about 44 percent since soaring to a record $147.27 on July 11.
"We haven't seen the bottom of this yet," Pervan said. "We thought $75 would be a floor but if the market mood doesn't change, $50 to $60 a barrel is not out of the question."
In other Nymex trading, heating oil futures fell 9.46 cents to $2.32 a gallon, while gasoline prices dropped 8.68 cents to $1.94 a gallon. Natural gas for November delivery rose 6.69 cents to $6.69 per 1,000 cubic feet.
In London, November Brent crude fell $3.66 to $79.00 a barrel on the ICE Futures exchange.