By Grant Smith and Christian Schmollinger
Nov. 12 (Bloomberg) -- Crude oil fell to a 20-month low on forecasts that a report will show U.S. crude inventories grew last week as the worsening economy wears down energy demand.
U.S. stockpiles of crude probably increased for a seventh week, while supplies of gasoline and distillate fuels also accumulated, according to a Bloomberg survey before tomorrow's Energy Department report. The International Energy Agency said it's ``more than likely'' to reduce its global oil demand growth estimate for a third month tomorrow.
``Oil prices remain under downward pressure,'' said Christopher Bellew, senior broker at Bache Commodities Ltd. ``Tomorrow's data are expected to continue the pattern of building stocks, compounding the picture of falling demand coming out of economic data.''
Crude oil for December delivery fell as much as $1.63, or 2.8 percent, to $57.70 a barrel in electronic trading on the New York Mercantile Exchange, the lowest since March 20, 2007. The contract traded at $58.15 a barrel at 1:01 p.m. London time.
Yesterday, oil lost $3.08, or 4.9 percent, to $59.33 a barrel, the lowest close since March 20, 2007. Prices have tumbled 60 percent from a record $147.27 reached on July 11.
The Organization of Petroleum Exporting Countries, which announced a 1.5 million barrel-a-day supply cut last month to staunch the price drop, may meet again before its next scheduled meeting in December if futures keep declining, Iranian OPEC governor Mohammad Ali Khatibi said in a phone interview from Tehran today.
U.S. Inventories
Prices have fallen too far based on the costs of production, the International Energy Agency's executive director Nobuo Tanaka said at a conference to launch the agency's 2030 outlook in London today.
Prices of $80 a barrel is need to ensure future supplies, The agency's Chief Economist Fatih Birol said at the same event.
U.S. crude stockpiles probably increased 750,000 barrels in the week ended Nov. 7 from 311.9 million the week before, according to the median of 12 analyst estimates before the Energy Department report.
Gasoline stockpiles probably increased 200,000 barrels from 196.1 million barrels the week before, according to the survey. Supplies of distillate fuel, a category that includes heating oil and diesel, rose 1 million barrels from 127.8 barrels the week before, the survey showed.
The department is scheduled to release its weekly report tomorrow at 11 a.m. in Washington. The report is being delayed by a day because of yesterday's Veterans Day holiday.
`Pull Back'
``The market works on emotions and fundamentals and both are still pointing to lower prices,'' Stephen Schork, president of energy analysts Schork Group in Philadelphia, said in an interview with Bloomberg Television. ``We do know that we are in a recession and demand is pulled back greatly.''
The IEA already has cut its 2008 forecast by about 1.3 million barrels a day in seven revisions this year. Last week it published a summary of its annual World Energy Outlook, slashing its 2030 projection by 9.4 percent to 106 million barrels a day.
Brent crude oil for December settlement was at $55.38, down 33 cents, on London's ICE Futures Europe exchange at 12:23 p.m. London time. It earlier fell as much as $1.43, or 2.6 percent, to $54.28 a barrel, the lowest since Jan. 30, 2007.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
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