The precipitous fall in oil prices – from a record high of over $147 a barrel on July 11 – comes as businesses across the world cut jobs in an effort to survive the global economic slowdown.
As oil prices fell on Friday, the US labour department reported that 530,000 people fell out of work in November.
The US unemployment rate now stands at 6.7 per cent, its highest level since October 1993.
The fall in oil prices and industrial output, along with higher than expected levels of unemployment in the world’s biggest economies, have led analysts to predict that the global recession will be a protracted one.
"The wild bull era is over," Phil Flynn, an analyst at Alaron Trading, said.
The decline in oil prices comes after the Organisation of the Petroleum Exporting Countries (Opec) put off a decision on reducing oil output until December 17.
A sharp rise in oil prices in the first seven months of 2008 was due to strong global economic growth, cheap money and available credit, Flynn said.
But since the global financial crisis began in September, primarily in the banking sector, lines of easy credit to businesses have evaporated, hitting demand for crude.
"We are now entering a new era of lower and more stable oil prices for years to come. That does not mean we will not see other bull markets along their way but get used to the markets trading different than they did throughout most of this decade," he said.
The International Energy Agency (IEA) on Friday lowered its projections for global oil demand in 2008-2013.
It said that demand for oil products would climb from 86.2 million barrels a day in 2008 to 91.3 million in 2013, revising downwards its July forecasts.
The US, eurozone and Japan are already in recession and investors are concerned that oil prices could sink as low as $25 a barrel if the global downturn hits major emerging countries such as China and India.