U.S. gasoline consumption has declined for the past six months and China's economy has slowed amid the financial crisis that's spilling into emerging markets. OPEC, supplier of more than 40 percent of the world's oil, will decide on Oct. 24 to lower output by 1 million barrels a day, according to a Bloomberg survey. The dollar rose to the highest since November 2006 against the euro.
Crude oil for December delivery slid as much as $3.70, or 5.1 percent, to $68.48 a barrel on the New York Mercantile Exchange. It was at $68.96 as of 9:04 a.m. local time.
The November contract expired yesterday, after declining $3.36 to settle at $70.89 a barrel. Oil futures, which have tumbled 53 percent from July's record of $147.27, are down 21 percent from a year ago.
U.S. gasoline demand dropped 6.4 percent last week from a year earlier, the 26th consecutive weekly decline, a MasterCard Inc. report showed yesterday.
Crude also fell as the dollar rose. The U.S. currency climbed above $1.28 per euro for the first time since November 2006 on speculation European central banks will cut interest rates as the global economy heads for recession. It traded at $1.2866 at 8:46 a.m. in New York, from $1.3063 yesterday.
Investors looking for protection against the dollar's decline earlier this year helped push crude to a record. A strengthening dollar reduces the appeal of commodities.
Iran, OPEC's second-largest producer, said it favors a cut of between 2 million and 2.5 million barrels a day. Ministers from Algeria, Libya, and Qatar have said OPEC, which provides 40 percent of the world's oil, will need to trim supplies.
Saudi Arabia, which dominates OPEC proceedings as the group's largest producer, has yet to comment on its intentions.
OPEC forecasts an excess of supply at the end of the year and start of 2009, the group's Secretary General Abdulla el- Badri told reporters yesterday in Moscow. OPEC will try to balance the market, el-Badri said, adding that it may not be able to achieve this goal on its own.
The U.S. Energy Department will probably report today that oil and gasoline supplies rose last week, a Bloomberg News survey showed. Crude oil inventories climbed 2.65 million barrels in the week ended Oct. 17, the fourth straight weekly gain, according to the survey.
Brent crude oil for December settlement fell as much as $2.96, or 4.3 percent, to $66.76 a barrel on London's ICE Futures Europe exchange. It was at $67.02 as of 1:46 p.m. local time. Prices have fallen 20 percent in the past year.