Crude oil futures tumbled below $48 a barrel Tuesday, closing at their lowest level in seven weeks, on rising expectations that the U.S. supply of transport and home-heating fuels will be adequate this winter.

Light crude for December delivery dropped $1.72, or 3.5 percent, to settle at $47.37 per barrel on the New York Mercantile Exchange (search) as traders awaited the U.S. government's upcoming petroleum supply report. It was the cheapest closing price since Sept. 21, when Nymex oil finished at $47.10 per barrel.

While oil prices are down roughly 14 percent from the Nymex settlement high of $55.17 late last month, relief at the retail level might not come soon enough for consumers, according to the Energy Department (search), which on Tuesday raised its earlier estimate for home heating costs over the next five months.

Analysts also said it is too soon to definitively say the worst is over for fuel-hungry motorists, homeowners and businesses.

"That's the question. Is this uptrend over?" said Tom Bentz, a broker at BNP Paribas Commodity Futures in New York.

"I'm not convinced yet that the highs are in. They could be," Bentz added, "but I'd like to see some more evidence" that the nation's supply of crude and heating oil will be sufficient this winter.

An important set of evidence will be revealed to the market on Wednesday, when the Energy Department releases its weekly petroleum supply data.

Traders appeared to be betting Tuesday that the data will show increases in domestic inventories of crude oil and distillate fuel, which includes heating oil, diesel and jet fuel.

James Cordier, head trader at Liberty Trading Group Inc. of Tampa, Fla., said Wednesday's supply report — and, perhaps more importantly, the market's reaction to it — could "decide energy prices for the rest of the year."

The nation's oil supply is about 1 percent below year ago levels but has been growing steadily over the past six weeks. The supply of distillate fuel, meanwhile, is 12 percent below year ago levels and is a major reason why heating oil has been so expensive lately.

The average retail price of heating oil was $2.06 per gallon nationwide last week, compared with $1.38 a gallon a year earlier.

The Energy Department predicted Tuesday that residential heating oil costs would average $1.88 per gallon in the October-March period, an increase of 37 percent from a year ago. At the start of last month the agency had forecast a 28 percent increase, but that was before oil prices surged above $55 a barrel.

Since then, prices have come down as extra barrels of crude arrive in the U.S. market from abroad and daily oil output in the Gulf of Mexico recovers from damage caused by Hurricane Ivan (search) in mid-September.

Traders are also increasingly confident that U.S. refineries — coming out of pre-winter maintenance — will have enough time to ramp up production of heating oil ahead of the Northern Hemisphere winter, staving off another surge in prices.

Heating oil for December fell 2.44 cents Tuesday to settle at $1.342 per gallon, while natural gas dropped 12.9 cents to $7.471 per 1,000 cubic feet. Gasoline futures slipped 4.14 cents to $1.2339 per gallon.

In London, Brent crude for December delivery plunged $2.21 to $43.71 per barrel on the International Petroleum Exchange.

Still, the market remains jittery due to the world's limited excess production capacity, which means there is little room to maneuver if there is a prolonged output disruption. The supply cushion is only about 1 percent of the 82.4 million barrels consumed daily worldwide.

Traders also remain concerned about developments in Iraq and Nigeria, two key exporters that are vulnerable to supply disruptions.

In Iraq, U.S. forces are pounding the insurgent stronghold of Fallujah in what is expected to be a drawn-out assault to weed out Islamic extremists. Militants have vowed to disrupt Iraq's badly needed oil exports, and a northern pipeline already has been knocked out by saboteurs.

In Nigeria, the labor minister warned Monday that oil workers who participate in next week's planned general strike aimed at halting the country's exports risk losing their jobs. Nigeria is America's fifth-largest source of crude oil.

Paul Horsnell, head of energy research at Barclays Capital in London, said markets could turn around again before the year is up.

"This is just a lull," he said, suggesting that prices will likely again rise within weeks, as the Northern Hemisphere cold season sets in. For oil markets, he said, "winter doesn't come in November, it comes in December."

Oil prices would have to surpass $90 per barrel to match the inflation-adjusted peak set in 1980.