US oil settles at $63.05, lowest since July 2009

The floor for crude oil is...
The floor for crude oil is...   

World oil prices slid another 4 percent to new five-year lows on Monday, as expectations of a deeper slump next year and a prediction by a core OPEC member that crude will remain at $65 for several months triggered another round of selling.

U.S. crude oil settled 4.2 percent lower at $63.05 per barrel, at a new five-year low, its third worst drop of of the year. Brent crude for January fell was last down 4 percent at $66 a barrel, after slipping to a session low of $65.93—its lowest since October 2009.

Read MoreOil stocks slump as crude falls to multiyear low

The chief executive of Kuwait's national oil company said oil prices were likely to remain around $65 a barrel for the next six to seven months, the latest indication that Gulf producers were content to ride out the latest rout.

The pessimistic outlook deepened the decline in a market that many traders now see as having little chance of rebounding.

"When these things go lower, they tend to go much farther than people anticipated," said Tariq Zahir at Tyche Capital. "I definitely think we're going to keep heading lower, everyone is trying to pick a bottom."

Read MoreOil tumbles after Morgan Stanley cuts forecasts

Cramer: Oil decline not over
Cramer: Oil decline not over   

Late on Friday, Morgan Stanley set a new bar for bearishness on Wall Street, slashing its average 2015 Brent base-case outlook by $28 to $70 per barrel and warning that prices could drop as low as $43 a barrel next year.

"Without OPEC intervention, markets risk becoming unbalanced, with peak oversupply likely in the second quarter of 2015," Morgan Stanley analyst Adam Longson said.

Thus far, there appears little sign of intervention, even after oil prices dropped 15 percent, or nearly $12 a barrel, since the Organization of the Petroleum Exporting Countries opted not to cut production at its Nov. 27 meeting.

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Top exporter Saudi Arabia has resisted calls from poorer members to curb output and shore up prices which have slumped more than 40 percent since June.

Libya's state oil company said on Sunday the country was producing 800,000 barrels a day, though its El Sharara oilfield was closed due to a pipeline blockade.

It is unclear how soon the price slump will slow the U.S. shale boom. While the number of onshore rigs drilling for crude oil remains relatively high, companies are making deeper cuts to spending for next year. On Monday, Conoco said it would slash spending by 20 percent, or $3 billion, the biggest reduction thus far announced by U.S. drillers.