ICE December Brent closed down 67 cents to $81.67/barrel as a strong US dollar and continued signs that OPEC members appear unwilling to cut production pushed the benchmark contract to a front-month low not seen since October 2010.
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NYMEX December crude ended the session up 54 cents to $77.94/b, one day after setting its own multi-year low.
NYMEX refined products were mixed. December ULSD closed down 6 points to $2.4687/gal. Front-month RBOB settled up 25 points at $2.1036/gal.
Comments by OPEC members downplaying the fall in oil prices as traders and analysts speculated whether the producer group will trim output at its November 27 meeting weighed on crude futures.
Kuwaiti Oil Minister Ali al-Omair said current oil prices are unlikely to have a negative impact on the economies of Kuwait and other Gulf oil producers. Omair said a day earlier he did not expect OPEC to cut output at its next meeting.
Algerian Oil Minister Youcef Yousfi told the country's national radio Tuesday there was no need to panic over the falling global oil price, saying its oil and gas investments would not be impacted as a result of lower prices.
"OPEC is giving oil bulls little to hang their hat on," Price Futures Group analyst Phil Flynn said. "The message is clear that OPEC is going to pump oil until hell freezes over."
The dollar's rise added to Brent's slide. The dollar gained against the Japanese yen, breaching a seven-year high reached last week of 115.6 yen, peaking at more than 116 yen.
The possibility Japanese Prime Minister Shinzo Abe may delay a retail sales tax hike spurred risk appetite and caused the yen to tumble, analysts said.
A strong dollar puts downward pressure on oil prices as dollar-denominated commodities, such as crude, become more expensive for holders of other currencies.
"We are convinced that we've begun a long term, multi-year bull market for the dollar, and [to put] that in baseball terms, we are but in the second or third inning of a nine-inning game," Dennis Gartman, publisher of the Gartman Letter, said.
Libyan oil production has fallen to around 540,000 b/d, down from a recent high of 1 million b/d at the end of October, a source with close ties to state-owned National Oil Company said Tuesday.
The drop comes following the closure of Sharara and Elephant (El Feel) oil fields. The 340,000 b/d capacity Sharara field was shut after gunmen overran the facility last week, while the Elephant field was shut in because it shares a power supply with Sharara.
However, the loss of Libyan output has had a muted market impact because the NOC insists both fields will resume production soon.
Tim Evans, analyst at Citi Futures and OTC Clearing, said the outcome in Libya will influence OPEC strategy.
"What we think is clear is that if Libyan production is [1 million b/d] or more going forward, then other OPEC members need to cut output or prices will continue to slide," he said.
Libya's production averaged 860,000 b/d in October, the highest monthly volume since July last year, when output averaged 1 million b/d, a Platts survey of OPEC and oil industry officials and analysts showed Tuesday.
Total OPEC crude output fell 300,000 b/d to 30.3 million b/d in October from 30.6 million b/d in September as supply from Saudi Arabia, Iraq and Nigeria fell, the survey found.
The October total leaves OPEC overproducing its 30 million b/d output ceiling by just 300,000 b/d, but is some 900,000 b/d above OPEC's most recent forecast of demand for its crude in the first quarter of next year.
"It's a fair assessment OPEC producers will look to bring their production back to the 30 million b/d target, but anything beyond that in terms of an actual cut to the ceiling would be a surprise," Tony Headrick, analyst at CHS Hedging, said.