Oil prices dipped below 56 dollars a barrel on Friday, bringing crude futures about 20 percent below the August peak.

The average retail price of gasoline in the United States is down 25 percent from its early September high of 3.07 dollars a gallon.

Traders are hesitant to declare that oil prices have bottomed out, but said a move higher would not be surprising either given the magnitude of the decline in such a short period of time.

Crude futures slipped in New York overnight, with US crude stockpiles deemed sufficient for the winter months, but investors were absorbing the latest report from the Organization of Petroleum Exporting Countries.

Factors that are supportive of prices include the world's limited amount of excess oil-production capacity, the war in Iraq and the threat of a cold winter, which would drive up demand for home-heating fuels.

Light sweet crude for December delivery fell 74 cents to 55.60 dollars in afternoon trading on the New York Mercantile Exchange. The contract finished at 56.33 dollars a barrel on Thursday, its lowest settlement price since June 15, when front-month crude settled at 55.57 dollars. Crude futures hit an intraday peak of 70. 85 on Aug. 30.

In London, Brent blend crude futures for January traded down 10 cents at 54.75 dollars a barrel on the ICE Futures exchange.

But according to some analysts, the expectation now is that sustained cold weather in the US Northeast is just a matter of time, and that is keeping crude from falling too low.

Many parts of the United States experiencing chilly weather in the past few days will see even colder blast next week.

Source: Xinhua