* Oil falls below $70 to new 16-month lows
* OPEC says action needed to avoid huge oil glut
* U.S. data may show increase in crude, gasoline stocks
* Russia may create oil reserve
(Updates prices)
By Jane Merriman
LONDON, Oct 22 (Reuters) - Oil fell to a new 16-month low
below $70 a barrel on Wednesday, pressured by a gloomy outlook
for the global economy that could limit the impact of any supply
cuts OPEC might agree at a meeting on Friday.
Falls in European stock markets, plus the U.S. dollar's rise
to a 2-year high against a basket of currencies added to
pressure on oil and other commodities.
U.S. crude for December delivery <CLc1> was down $4.31 at
$67.87 by 1452 GMT. It touched a session low of $67.78, its
lowest since June 2007.
London Brent crude <LCOc1> was down $3.76 at $65.96.
"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 to suffer."
Oil has been tracking downward moves in global equity
markets, which have been reacting to increasing evidence of a
global slowdown.
"The relationship between oil and equities could be tested
by any decision by OPEC to reduce production at this week's
meeting," said Frances Hudson, global thematic strategist at
Standard Life Investments.
"But the current feeling is that falling demand will
outweigh the impact of a production cut."
The price of oil has more than halved from a record high
above $147 in July as the financial crisis has started to hit
energy demand in the United States, the world's largest energy
consumer, and other industrial countries.
EMERGENCY MEETING
The Organization of the Petroleum Exporting Countries called
an emergency meeting this Friday, when the producer group is
widely expected to agree to cut supply to defend prices.
Nigerian Oil Minister Odein Ajumogobia said on Wednesday the
OPEC member would be comfortable with oil at $80 a barrel, but a
cut in its output was not in its best interests. []
OPEC Secretary General Abdullah al-Badri has said that the
world would face a huge oversupply of oil next year, if
production continued at current rates. []
Badri is in Moscow where he met Dmitry Medvedev, president
of Russia, which is the world's second largest oil exporter
after Saudi Arabia.
Other top OPEC officials have called on Russia this week to
join OPEC in cutting production. Badri said he would not ask
Russia for a cut.
Russia's ministry of energy is considering creating an oil
production reserve to influence global prices, Deputy Prime
Minister Igor Sechin said. []
More evidence of mounting global supplies is expected to
emerge later on Wednesday, when the U.S. government publishes
weekly statistics on oil inventories.
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.
(Additional reporting by Fayen Wong; editing by James Jukwey)
