No letup in US crude's swoon, plunges 4% to settle near $54

IEA: Oil volatility not new, market will respond

Global crude prices fell again on Thursday, a day after a short-covering rally, as traders placed new bets that the market would resume a six-month rout on worries about a supply glut.

In early trade, oil extended gains from the previous session, when short-covering lifted prices more than $3 a barrel.

But in late morning trade in New York, benchmark and U.S. crude tumbled to fresh session lows, with Brent off by about $2 to near $59 a barrel. U.S. crude for January settlement ended the session down by more than $2 per barrel, at $54.11.

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"We're continuing to search for a bottom, and might even see another significant drop before the year-end," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut.

Cramer: Where oil will go

Traders also cited a Bloomberg report that a Nigerian port workers union had suspended a strike. Reuters has not verified the report, and oil shipments did not appear to be affected. The dock workers union is only involved in container shipping in Lagos, not oil ports.

Separately, the OPEC country's two major oil worker unions will meet with the government on Thursday to discuss an end to a strike that began on Monday. So far the strike has not affected oil exports, they have said.

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"It looks like investors favor support around $60 a barrel," said Daniel Ang, an investment analyst at Phillip Futures in Singapore, adding that lower investment in production could be felt in the market as early as the second quarter of 2015.

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Chevron Corp has put a plan to drill for oil in the Beaufort Sea in Canada's Arctic on indefinite hold, while Marathon Oil cut its capital expenditure for next year by about 20 percent.

Canadian oil producers also deepened cuts in 2015 spending, as Husky Energy, MEG Energy and Penn West Petroleum joined those hacking back capital budgets in response to tumbling crude prices.