Oil fell 2 per cent to below $66 a barrel today, extending losses for a second day after a sharp sell-off in buoyant Chinese shares triggered wider losses in risk assets.
Chinese stocks fell more 5 percent, the biggest drop in eight months, as investors took profits from a five-day liquidity-driven rally amid worries that banks may begin to curb lending. The Hong Kong market fell more than 3 per cent.
US crude fell $1.32 to $65.93 a barrel, after a hitting a low of $65.51. The oil sell-off started yesterday after the US consumer confidence index dropped below analysts' expectations, recording its second-straight decline amid a difficult job market.
London Brent slid 88 cents to $69.00.
Equities markets in Asia, which had rallied for more than a week, mostly fell for a second day, after after disappointing corporate earnings results pushed down US markets.
Oil has also earlier fallen following bearish data from the American Petroleum Institute (API), which reported that US crude stockpiles jumped 4.1 million barrels last week, countering analysts' forecasts for a 1.3 million-barrel draw, as imports rose and refiners slowed their processing rates.
Traders will now look to data from the US Energy Information Administration (EIA), due this afternoon, expected to show a 1.3 million-barrel decline in crude inventories as lower imports offset tepid refinery demand.
A Reuters survey also forecast a 400,000-barrel rise in gasoline stocks and a 1.3 million-barrel increase in distillates.
Reuters