US oil prices dipped into negative territory as dealers worried a bumpy economic recovery could delay a rebound in ailing world energy demand.

US crude fell nine cents to $59.60 a barrel by 5.45pm, extending a decline that shaved 11% from the price last week. London Brent crude rose seven cents to $60.76.

The losses came after US data showed disappointing US consumer spending in June alongside a larger-than-expected increase in producer prices - a reflection of inflation.

Adding gloom to the economic outlook, developed countries are expected to lose nearly 30 million jobs from the end of 2007 to the end of 2010, according to the OECD.

In its latest monthly report, OPEC said world demand for its oil would fall by 380,000 barrels per day to 28.11 million in 2010 compared with this year. For the nearer term, the market will look to US inventory data due for release today and tomorrow.

Later today, industry body the American Petroleum Institute will release its figures, followed by the US government's Energy Information Administration tomorrow.

Analysts polled by Reuters predicted crude stocks will fall for a sixth straight week, but distillate inventories - which include diesel and are already at a nearly 25-year high - were expected to rise again. Petrol stocks are also expected to rise.

One year ago, oil prices had struck record peaks above $147 - but they have since collapsed in line with slumping energy demand.