Oil prices sank Wednesday to multi-month lows on worries about a possible Spanish bailout, with sentiment also hit as the dollar soared to a near two-year peak against the European single currency.
New York's main contract, West Texas Intermediate (WTI) crude for delivery in July, dropped $2.94 to $87.72 a barrel.
In London, Brent North Sea crude for July slumped to $103.47 per barrel, plunging $3.21 for the day.
The prices continued to map the fall in Europe's economic prospects and the decline in the euro, which dropped 0.9 percent to a 23-month low of$1.2370.
A stronger greenback makes dollar-priced crude more expensive for buyers using other currencies, like the euro.
"Crude oil prices have plunged... due to persistent concerns about Spain's economic stability," said Sucden analyst Myrto Sokou.
"Brent oil retreated sharply, hitting a fresh five-month low, as concerns about the eurozone's economic stability weigh heavily on risk appetite and prompted investors to a heavy sell-off. WTI crude oil also followed the downtrend."
Analyst Nic Brown of Natixis said strong holiday gasoline sales in the United States last week, and the effect on demand from lower prices, could help cut the huge US fuel stockpiles of recent months.
"The combination of the Memorial Day weekend and falling gasoline prices may be enough to boost gasoline demand," Brown said.
"In recent weeks, gasoline demand has been slowly recovering versus 2011 levels."