NEW YORK, United States (AP):

Crude oil futures briefly dipped below US$60 a barrel on Monday, but later jumped by more than $1 in a sign that the market free-fall may be nearing an end.

Oil prices have fallen by more than 20 per cent since the July peak above US$78 a barrel amid rising global inventories, slackening demand growth and a perception among traders that geopolitical and weather-related supply threats have eased.

The downtrend was halted on Monday.

Light sweet crude for November delivery on the New York Mercantile Exchange briefly fell as low as US$59.52 a barrel, before bouncing up to US$61.95 an increase of $1.40 over Friday's close.

Some beliefs

Some traders believe OPEC may cut production in order to prop up prices; others were forced to buy in order to cover incorrect bets that oil futures would fall even more sharply than they have.

The last time front-month futures settled below US$60 was March 10.

Oil prices have plummeted in recent weeks due to the lack of developments in the standoff between the United Nations and Iran, who defied the UN's August 31 deadline to stop enriching uranium.

The high prices in July and August were largely fuelled by concern over the possibility that Iran could disrupt oil supply if sanctions were imposed or if the month-long conflict between Lebanon and Israel escalated.

Fears

Fears of hurricane damage to U.S. Gulf Coast refineries also drove the market higher this summer but the storms so far have blown past the coast.

The Organisation of Petroleum Exporting Countries recently reduced its demand forecast for the remainder of the year, citing weakening demand in the U.S., among other factors. However, some cartel members have suggested that oil prices below US$60 could prompt a production cut.

As oil has plummeted, so have prices at the pump.

The Oil Price Information Service said Monday that U.S. retail gasolene prices average US$2.38 a gallon (63 cents a litre), a drop of 50 cents a gallon in the past month.

"We'll go beneath last year's autumn-winter low of US$2.12 a gallon, and we may do so as early as October," said OPIS director Tom Kloza.