Renewed jitters over the prospects of slower growth in the world's two largest economies - the United States and China - saw oil prices dive, markets sputter and commodities take a hit.
Crude has fallen below US$47 a barrel for the first time since the Organisation of Petroleum Exporting Countries (Opec) agreed to cut output in November.
Prices have slumped 8 per cent since Wednesday to US$46.69 yesterday as Opec and other producers seemed to rule out deeper supply cuts to reduce a persistent glut.
After the cartel cut production, a 22 per cent bounce to a high of US$57.10 in January was erased partly as US crude output and shale production rose.
Analysts attributed the oil slump to high US commercial inventories, which now stand at 528 million barrels, close to their historical high.
Some stock markets across Asia fell in tandem with oil prices yesterday as analysts forecast further weakness amid signs that global US and China demand may not be strong enough to mop up the excess production. Shanghai fell 0.64 per cent, Shenzhen lost 0.78 per cent, while Hong Kong fell 0.84 per cent.
Further dampening sentiment are weaker Chinese purchasing managers' index numbers, and data showing that US economic growth slowed to an annual rate of just 0.7 per cent in the first quarter - the slowest in three years.
Data this week showed China's manufacturing growth last month slowed to its weakest pace in seven months as domestic and export demand faltered, reinforcing views that the country's economic growth is starting to moderate after a strong start to the year.
Iron ore and copper prices have been battered in recent days as weaknesses in the growth story emerge.
But Capital Economics' commodities economist Thomas Pugh believes the pessimism is overdone and still sees Brent crude oil recovering to US$60 by the year end.
The Opec production cut agreement is set to expire at the end of next month. At the next meeting on May 25, the cartel will decide whether to expand their agreement to lower crude production.
Mr Pugh believes Opec and Russia are likely to extend the cuts by at least three months at the meeting. He added that continued growth in China, where there are no signs of a hard landing yet, as well as Japan, the euro zone and the US, should keep oil demand strong.
But ABN Amro warned that Opec may not expand the agreement, as oil prices gained less than expected in the first quarter this year and have triggered higher US crude output. This could spell a shift of market share from Opec to mainly US oil producers.
CIMB economist Song Seng Wun said weak oil prices could hamper a recovery in Singapore's offshore marine sector. "The price drop is a setback for a sector that is still waiting to see daylight. Every time prices drop or stay below US$50, we may see the sector's recovery pushed back, which puts pressure on companies that are heavily indebted."
This sector contributes 10 per cent of Singapore's manufacturing activity and roughly 2 per cent of overall economic output, he added.