Crude oil dipped to a 20-month low on forecasts that a Energy Department report will show US crude inventories have grown last week even as demand for energy begins to thin in a troubled economy. Ahead of a Energy Department report, a Bloomberg survey said that US stockpiles of crude probably increased for the seventh week, even as supplies of gasoline and distillate fuels also accumulated.

Also impacting sentiment would be speculation that a International Energy Agency (IEA) report will reduce global oil demand growth estimate for a third month tomorrow. Analysts now say oil prices would continue to be under pressure as forthcoming data would reveal that stocks are building up even as demand continues to fall.

Meanwhile crude oil for December delivery fell as much as 88 cents, or 1.5 per cent, to $58.45 a barrel in electronic trading on the New York Mercantile Exchange. Yesterday, it lost $3.08, or 4.9 per cent, to $59.33 a barrel, the lowest close since 20 March 2007. After the market closed, crude tumbled briefly to $54.92 in electronic trading, a price not seen since January 2007.

Brent crude oil for December settlement was at $55.19, down 52 cents, on London's ICE Futures Europe exchange at 8:48 am London time. It earlier fell as much as 36 cents, or 0.7 per cent, to $55.35 a barrel.

The contract yesterday dropped $3.37, or 5.7 per cent, to close at $55.71 a barrel, the lowest settlement since 29 January 2007.

Prices have now tumbled 60 per cent from a record high of $147.27 reached on 11 July.

Market observers also point out that crude prices are experiencing sharp swings almost daily on the New York trading floor. For instance, even though the Nymex contract now trades near first-half 2007 prices, the difference between daily highs and lows at that point of time was around $1.50 a barrel. The average daily range now is around $5.50 a barrel, with recent daily peaks at $9.50.

The IEA already has cut its 2008 forecast about 1.3 million barrels a day in seven revisions this year.