Oil fell more than 2% as warm weather thawed top consumer the United States, cutting demand for heating fuel.
U.S. crude settled down $1.32 or 2.2% at $58.07 after falling as low as $57.32.
"It's all about the weather. Snow is melting and so are (crude futures) prices," said Phil Flynn, analysts for Alaron Trading, Chicago.
Demand for heating fuel in the U.S. Northeast, the world's biggest heating oil market, was expected to drop as frigid weather subsided after snow and ice storms last week.
Forecasters said the warmer weather likely marked the end to the U.S. winter, which began mildly before picking up in late January.
"The probability of another long-term Arctic cold snap occurring before the end of winter is just about zero," said Jim Rouiller, Senior Meteorologist for Planalytics.
"As a result, more likely than not -- spring will come early to the consuming East."
Worries over Iran's stand off with the West over Tehran's nuclear program kept supporting markets.
The United Nations' energy watchdog, the International Energy Agency, was to issue a report on Wednesday on Iran's compliance with a U.N. Security Council demand that it halt nuclear fuel work such as uranium enrichment.
Tehran has defied international calls to halt to program, despite the possibility the Security Council could pass fresh sanctions on Iran if it fails to comply.
On Tuesday Iran's security council chief, Ali Larijani, will meet IAEA director Mohamed ElBaradei, whose report to the Security Council was expected to confirm that Tehran has defied a 60-day council deadline to stop such work.
Oil traders fear further sanctions could prompt Tehran to curb or cut its own oil exports, or attempt to disrupt Gulf shipments through the Strait of Hormuz, through which an estimated one-fifth of the world's crude travels.
Tensions also are on the rise in Africa's biggest producer Nigeria ahead of elections in April. A fifth of the country's output is already closed because of militant attacks.
"Today's sell-off is typical after a long weekend so I am not too concerned. The geopolitical tensions are creeping back into the market," said Nauman Barakat, senior vice president at Macquarie Futures USA.
Heating oil settled down 2.84 cents or 1.7% at $1.6450. Resistance was charted at $1.70 with support slated at $1.60.
RBOB (unleaded gasoline) fell 0.2% or 0.38 cents to settle at $1.6491. Support was charted at $1.60 with resistance at $1.70.
Natural gas gained 8.2 cents or 1.1% to settle at $7.585.