* Oil falls as much as $3, nearing lowest in 16 months
* OPEC says action needed to avoid huge oil glut
* U.S. data may show increase in crude, gasoline stocks
(Releads, updates prices, analyst comments)
By Fayen Wong
PERTH, Oct 22 (Reuters) - Oil fell by more than $3 to near
its lowest in 16 months on Wednesday, dropping back below $70
on mounting worries that output cuts by OPEC will not be enough
to offset slackening energy demand in leading consumers.
An expected rise in weekly U.S. crude and fuel stocks in
data due later in the day also weighed on oil prices, which
tumbled along with other commodities including metals that were
walloped by a rising U.S. dollar and renewed stock market
selling.
U.S. crude for December delivery <CLc1> fell $2.58 to
$69.67 by 0644 GMT, recovering from an earlier trough of $68.90
a barrel, near last week's low of $68.57, the weakest price
since late June of 2007 and less than half of the record high
in July.
London Brent crude <LCOc1> fell $2.28 to $67.44.
"People are just scared that the economy is going down the
tube," said Tony Nunan, assistant manager of risk management at
Mitsubishi Corp in Tokyo.
"There is a feeling that we are now going to see problems
in the real economy; employment, real estate prices will
continue to fall and the big concern now is how much economic
growth is going suffer."
Asian stocks slumped to their lowest since December 2004 on
Wednesday, with Japan's benchmark Nikkei average <> down
6.8 percent, tracking losses in U.S. markets as poor U.S.
corporate results fanned worries of a protracted slowdown.
[]
The price of oil has more than halved since hitting a
record high above $147 in mid-July on worries that the
financial crisis would slash energy demand in the United
States, the world's largest energy consumer, and other
industrial countries, prompting OPEC to scramble an emergency
meeting this Friday.
OPEC Secretary General Abdullah al-Badri has led the call
for output cuts, telling reporters on Tuesday that the world
would face a huge oversupply of oil next year, if leading
producers failed to cut supply. []
More evidence of mounting global supplies is expected to
emerge later in the day as U.S. crude oil stocks are expected
to have risen by 2.6 million barrels last week, according to a
Reuters poll of analysts. []
A 100,000 increase in distillate stocks and a 2.8 million
barrel build in gasoline inventories is also expected in the
data due out at 10:35 a.m. EDT (1435 GMT), reinforcing fears
that consumer fuel use is in decline.
U.S. weekly retail gasoline demand to Oct. 17 fell 6.4
percent year-on-year, Mastercard Advisors said Tuesday, though
it rose compared with the previous week. []
Though oil prices staged a strong rally earlier this week
on expectations that OPEC would make significant cut to output,
fears of a global recession have returned to haunt commodities.
The current U.S. economic downturn could be worse than the
1990-91 recession, with growth restrained for as long as one to
three years, a top Federal Reserve policy-maker said on
Tuesday. []
(Additional reporting by James Topham in Tokyo; Editing by
Jonathan Leff)
