With fears about a slowdown in China also hitting sentiment, US light crude had fallen $2.40 a barrel to $84.05.
Brent crude was also lower, dropping $1.66 to $110.67 per barrel.
The falls come after data on Friday showed that the US economy added no new jobs in August, a much worse reading than had been expected.
Analysts had predicted that the non-farm payrolls figures from the Department of Labor would show about 70,000 new jobs had been created.
The unemployment rate remained unchanged in August at 9.1%.
In Europe, the main share indexes were down sharply as concerns continue about the high debt levels of eurozone countries, and how these could impact on the wider economy.
Germany's Dax index and France's Cac were both 2.6% lower in morning trading.
Meanwhile, a report in China said that the country's service sector grew in August at its slowest pace since records began.
"Oil is falling on worries over weak demand, unemployment and talk of a double dip recession," said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt.
He added that oil prices would be falling further were it not for growing optimism that the US central bank, the Federal Reserve, will announce new measures later this month to try to stimulate the US economy.
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