Crude oil prices fell yesterday for a second straight session and are now more than $20 a barrel off a recent peak, as a US Government report showed larger-than-expected increases in inventories of refined petrol and distillates.

Crude oil prices fell yesterday for a second straight session and are now more than $20 a barrel off a recent peak, as a US Government report showed larger-than-expected increases in inventories of refined petrol and distillates.

The government's Energy Information Administration said petrol stocks rose by 2.9 million barrels last week against forecasts of a 300,000- barrel build.

Stocks of distillates, which include diesel, rose by 2.4 million barrels when they had been forecast to rise by 2.3 million barrels.

West Texas light, sweet crude for September delivery dropped $3.98 at $124.44, off a trough of $125.31, the lowest level since June 5. North Sea Brent crude traded in London was $4.26 lower at $125.29. On July 11, crude set a record price of $147.27.

The build of refined product stocks in the United States, the world's biggest energy consumer, overshadowed a larger-than-expected drop in crude oil stocks, which fell by 1.6 million barrels against forecasts of a 700,000-barrel draw.

The drop also coincided with a firmer dollar which hit a two-week high against the euro yesterday.

Analysts said the market could head lower for now, given that the next area of support is around $120 to $122 a barrel for US crude.

Elsewhere in the energy sector, the head of Russian gas giant Gazprom said the world would face a big energy shortage from 2012 and had lost its chance to enjoy low energy prices by investing too little in new fields.

Alexei Miller, who has previously predicted that oil prices would rise to $250 per barrel, said consumer countries should now accept a bigger role for producers.

The head of the world's largest gas firm, which supplies a quarter of Europe's gas, said the global energy imbalance could be solved if gas-exporting nations boosted their co-operation, though he refrained from calling it "a gas Opec".

"Within the framework of the Gas Exporting Countries Forum, we will create a global gas balance," Miller said. "This will provide us with answers to when, where and how much gas should be produced," he said.

Meanwhile, oil giant ConocoPhillips said record crude prices helped its second-quarter profit dwarf last year's results, when the company incurred a $4.5bn charge related to its former assets in Venezuela.

The Houston-based firm said net income rose to $5.44bn for the April-June period from $301m in the year-ago quarter. Revenue increased to $71.4bn from $47.4bn a year ago.