Crude Oil Drops Below $70 After U.S. Reports Inventory Gain

Crude oil fell below $70 a barrel for the first time since August 2007 after a U.S. government report showed inventories increased more than twice as much as forecast.

Supplies rose 5.6 million barrels to 308.2 million barrels last week, the Energy Department said today in a weekly report. Oil also fell on doubts that the bank rescue plan will be enough to bolster global economic growth and fuel use. U.S. industrial output fell in September by the most in almost 34 years.

``The DOE numbers just added to the downward pressure on the oil market,'' said Brad Samples, a commodity analyst for Summit Energy Inc. in Louisville, Kentucky. ``Prices were already down on the awful industrial data. The weak economy is translating into rising inventories because nobody wants to burn the stuff.''

Crude oil for November delivery fell $5.18, or 7 percent, to $69.36 a barrel at 11:54 a.m. on the New York Mercantile Exchange. Oil fell as low as $69 a barrel, the lowest since Aug. 22, 2007, after release of the supply report at 11 a.m. in Washington. Prices are down 22 percent from a year ago.

Crude oil inventories were forecast to rise 2.6 million barrels, according to the median of analyst estimates in a Bloomberg News survey.

Gasoline stockpiles climbed 6.97 million barrels to 193.8 million barrels in the week ended Oct. 10, the report showed. Gasoline supplies were forecast to rise 3 million barrels, according to the Bloomberg survey.

U.S. fuel demand averaged about 18.6 million barrels a day during the past four weeks, the lowest since June 1999, according to the report. The U.S. consumes 24 percent of the world's oil.

OPEC Meeting

The Organization of Petroleum Exporting Countries, the producer of 40 percent of the world's oil, brought forward its planned meeting for next month to Oct. 24 after the fall in crude-oil prices.

``Following consultations with the president of the OPEC Conference and colleague ministers, it has been decided to re- schedule the Extraordinary Meeting of the OPEC Conference,'' the group said today in an e-mailed statement.

The 2.8 percent decrease in industrial output at factories, mines and utilities exceeded forecasts and followed a revised 1 percent decrease in August, the Federal Reserve said today.

``Commodities have gone from a leading asset class to a follower in just two months,'' said Christopher Edmonds, the managing principal of FIG Partners Energy Research & Capital Group in Atlanta. ``Two months ago you would look at the oil market for a signal about the direction of other markets. Today you look at equities to get an idea where oil will go.''

Credit Suisse Group and Sanford C. Bernstein & Co. slashed their oil-price forecasts for next year as tightening credit conditions and slowing economic growth eroded fuel demand.

Bernstein lowered its crude oil price forecast to $70 a barrel from $90 in 2009 and cut the 2010 estimate to $80 from $95 a barrel, according to a report today. Zurich-based Credit Suisse reduced its next-year estimate by 32 percent to $75.

Brent crude oil for November settlement declined $4.55, or 6.4 percent, to $66.25 a barrel on London's ICE Futures Europe exchange.