New York's main contract, light sweet crude for October delivery, dropped $1.47 to $71.63 per barrel -- the lowest since June 7.

London's Brent North Sea crude for October was down $1.24 at $72.38 a barrel.

"It’s the continuation of the downtrend with oversupply and negative economic data," BNP Paribas analyst Tom Bentz told AFP.

Markets on Tuesday reacted to data showing that existing US home sales plunged a whopping 27.2 percent in July to levels unseen in more than a decade, raising new fears of a double-dip recession.

The housing report raised "concerns that the economy is not recovering as had been hoped and implying that demand for oil and oil products will remain weak," Oil Marketer analyst Elaine Frei said.

The declines also came ahead of Wednesday’s US oil inventories report, which are expected to show that crude oil and distillates stockpiles grew last week but that gasoline inventories fell by nearly a million barrels in the period.

The White House described as "tough" the latest data tracking the housing sector, which was at the epicenter of the financial crisis, and vowed to do everything possible to keep the recovery on track.

Sales of single-family homes, town homes and condominiums dropped to a seasonally-adjusted 3.83 million units from a revised 5.26 million units in June, said the National Association of Realtors (NAR).

The plunge was more than double the 12.1 percent expected by most economists.

Oil fell Monday on persistent worries that weakening growth in the United States, the world's biggest oil consumer, could curtail demand.