Investors expecting a production cut from OPEC to support prices were disappointed as Saudi Arabia and Kuwait played down the possibility of the Organization of the Petroleum Exporting Countries reducing output.
OPEC, which produces about 40 percent of the world's crude oil, is due to meet in late November to discuss output targets.
"There's been market chatter that Saudi Arabia is unlikely to cut production in the November meeting so that's probably playing on the market," said Ankit Pahuja, a commodity strategist at ANZ in Melbourne.
"Seasonally, it's a weak point. We think there's more scope for recovery in November and December."
Brent crude fell 72 cents a barrel to $88.17 by 0342 GMT a barrel after touching the lowest since December 2010 on Monday. The November contract expires on Thursday.
U.S. crude dropped 69 cents a barrel to $85.05 after it pared Monday's sharp intraday losses to settle down 8 cents.
"There was probably some positivity that came out of the China data yesterday," Pahuja said. Underlying oil demand in the world's top energy consumer was still "quite strong", he said.
China posted a strong rebound in commodities imports in September, including a 13 percent rise in crude oil imports from August.
Despite the recent price slump, several analysts expect oil markets to recover ahead of peak seasonal winter demand in the Northern Hemisphere.
"We see the potential for a positive bounce into year-end, particularly given extremely bearish sentiment and positioning," Morgan Stanley analysts said in a note.
"Even if OPEC is not overly responsive before year-end, which we expect, fundamentals have turned, which should eventually lift crude prices."
Investors are looking ahead to weekly oil inventories data from the United States for price direction.
U.S. commercial crude stocks were forecast to have increased in the week ended Oct. 10, while refined products likely fell, according to a Reuters survey ahead of weekly inventory reports out of the world's biggest oil consumer.
Industry group the American Petroleum Institute (API) will issued its report later on Wednesday, and the U.S. Department of Energy's Energy Information Administration (EIA) will follow with its weekly data on Thursday. The reports have been delayed a day due to the Monday's Columbus Day U.S. federal holiday.