* Oil falls below $68 to 16-month low
* OPEC says action needed to avoid huge oil glut
* U.S. data shows big rise in gasoline stocks
* Russia eyes new swing producer role
(Updates prices, changes dateline from London)
By Chris Baldwin
NEW YORK, Oct 22 (Reuters) - Oil dropped nearly 7 percent
to a new 16-month low on Wednesday, as rising U.S. fuel
inventories added to signs an economic slowdown has dragged
down demand in the world's biggest energy consumer.
Gloom about the global economic outlook could limit the
impact of any oil supply cuts OPEC might agree at a meeting on
Friday.
U.S. crude for December delivery <CLc1> fell $5 to $67.18
by 12:47 EST (1637 GMT), touching its lowest since June 2007.
London Brent crude <LCOc1> traded down $4.52 at $65.20.
U.S. crude oil inventories rose 3.2 million barrels in the
week to Oct. 17, according to U.S. government data, against
analyst expectations for a 2.6 million build.
Distillate inventories leaped by 2.2 million barrels
against predictions for a 100,000 barrel gain. []
The Energy Information Administration also reported a rise
of 2.7 million barrels in gasoline stocks versus forecasts for
a 2.8 million increase.
"The numbers look bearish on virtually all fronts," said
Jim Ritterbusch of Ritterbusch & Associates. "The data
reinforces our bearish view and ups the probability of $62
crude," he said.
TRACKING EQUITIES
Oil has been tracking downward moves in global equity
markets as they react to increasing evidence of a global
slowdown.
Steep falls in European and U.S. stock markets, plus the
U.S. dollar's rise to a two-year high against a basket of
currencies on Wednesday helped drive down oil and and other
commodities.
"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 fallen 53 percent from its record high
above $147 in July as the financial crisis has hit energy
demand in the United States, the world's largest energy
consumer, and other industrial countries.
The Organization of the Petroleum Exporting Countries has
called an emergency meeting in Vienna this Friday. The
13-member producer group is widely expected to agree to cut
supply to defend prices.
OPEC Secretary General Abdullah al-Badri has said the world
would face a huge oversupply of oil next year, if production
continued at current rates. []
Badri is in Russia ahead of Friday's OPEC meeting, where he
met to exchange information with President Dmitry Medvedev.
Russia is the world's second largest oil exporter after Saudi
Arabia.
Other top OPEC officials have been calling on Russia this
week to join in a coordinated production cut. Badri said he
would not ask Russia for a cut.
But Russia's powerful deputy Prime Minister Igor Sechin,
who oversees the country's energy sector, said Russia is
considering creating an new oil production reserve to become a
swing producer to influence global prices. []
(Additional reporting by Fayen Wong and Jane Merriman; editing
by XXX)
