Light, sweet crude for December delivery was down $1.98 to $68.55 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore, ignoring the cue from Asian stock markets, which rallied as Democrat Barack Obama claimed an historic victory in U.S. presidential elections.

The contract overnight rose $6.62 to settle at $70.53 as the two-year U.S. presidential election campaign wrapped up.

"This is partly just a correction from a very large gain yesterday," said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney. "In the near term, worries about the international economic outlook will be really hard to overcome. The data flow is going to contain a lot of negatives that create pressure on the oil price."

Economic indicators out of the U.S. this week suggest the world's largest economy may be heading for its worst recession in decades. A Commerce Department report Tuesday said factory orders fell 2.5 percent in September from August, much worse than analysts had predicted.

On Monday, U.S. manufacturers reported lethargic numbers for October, showing the worst reading in more than a quarter century, according to the Institute for Supply Management. The slowdown, which was sparked by a credit crisis that began in the U.S. last year, shows signs of spreading across the world. Credit Suisse on Monday cut its forecast for growth in China's oil demand next year to nearly zero from 4 percent on the back of lower economic growth forecasts. "There are two forces working on the oil price," Moore said. "One is fear of weaker consumption and the other is OPEC cutting output to wind back surpluses in the market.

The Organization of Petroleum Exporting Countries said last month it would cut output quotas by 1.5 million barrels a day in addition to a 520,000 barrel cut announced earlier. Venezuelan Oil Minister Rafael Ramirez has said OPEC, which controls about 40 percent of world crude oil production, may slash production by at least 1 million barrels daily when it meets next in December. "It's not yet clear that OPEC is disciplined in cutting production," Moore said. "Compliance will be a key issue going forward."

Oil prices have fallen by about 55 percent since peaking at $147.27 a barrel in mid-July. In other Nymex trading, gasoline futures fell 2.77 cents to settle at $1.51 a gallon, after a steep fall overnight. Heating oil dropped 3.41 cents to $2.13 a gallon while natural gas for December delivery rose 5.1 cents to fetch $7.27 per 1,000 cubic feet. In London, December Brent crude fell $1.64 to settle at $64.80 on the ICE Futures exchange.