The US benchmark West Texas Intermediate fell as low as $39.86 a barrel, before recovering slightly to close at $40.45, representing a drop of over two per cent in a day.
The plunge comes as WTI is set to hit its second-longest losing streak in over thirty years, plummeting 31 per cent over the past weeks.
Global benchmark Brent crude also tumbled, by 2.5 per cent, to settle at $45.46 a barrel.
China’s slowing economic growth has pushed oil prices down further in recent weeks, already depressed by worries over the global supply glut.
The oversupply is expected to keep prices down for a long period, as figures from the International Energy Agency recently forecast that the glut will last until the end of 2016.