* Oil extends slide to new 13-month low on demand worries
* US, Japan stocks plunge on recession spectre
* US data expected to show third weekly rise in crude stocks
* Hurricane Omar strengthens, Caribbean refinery shuts units (Updates prices, adds Chavez comments, Japan stocks data)
SINGAPORE/TOKYO, Oct 16 (Reuters) - Oil fell for a third day on Thursday, plumbing a new 13-month low near $73 as commodity investors again rushed for the exit on fears of a collapse in demand growth with the world economy tilting toward recession.
Bleak U.S economic data and warnings from the U.S. Fed that tough times are not over led Wall Street to its worst day since the 1987 stock market crash, wiping out earlier optimism fuelled by government steps to avert a financial meltdown. Japan's Nikkei index dived as much as 10 percent in Thursday trade.
U.S. crude for November delivery fell $1.26, or 1.7 percent, to $73.28 a barrel by 0520 GMT. The front-month contract has lost nearly a third in value in three weeks, the steepest such decline since it began trading in 1983.
London Brent crude fell $1.17 to $69.63.
"The oil markets are now highly correlated to the stock markets. Everyone now uses the stock markets to gauge the health of the economy," said Clarence Chu at U.S.-based options trader Hudson Capital Energy.
Crude now stands more than 50 percent off its July peak above $147, and analysts have scaled back global demand growth estimates after a recent slew of gloomy data that has overshadowed OPEC's talk of possible production cuts and a hurricane that is disrupting Carribean refining operations.
Japan's crude oil inventories hit a 14-month high last week as crude runs stayed low, in part due to slack domestic demand, industry data showed on Thursday. [ID:nT151440]
JP Morgan cut its average oil price forecast for 2009 to $74.75 a barrel, and the Organization of the Petroleum Exporting Countries also reduced its forecasts for world demand for crude next year in its latest monthly report. [ID:nWLB2749]
The cartel meets in November in Vienna to assess the global financial crisis's effect on the oil market, with growing expectations it will want to lend support to a market that has been swept up in the deleveraging across commodity markets.
The Reuters-Jefferies CRB index <.CRB> tumbled 4.5 percent on Wednesday to its lowest in three-and-a-half years.
"Sentiment is just so bearish. I would think $70 is a pretty strong support, but the way the market is selling down, we just don't know," Chu said.
Venezuelan President Hugo Chavez said oil prices would probably keep falling as the U.S. economy headed south.
"The price of oil is falling? Yes. The price will carry on falling? Probably. But Venezuela will not drown," he said. Venezuela is one of the United States' biggest oil suppliers, with about half its government revenue derived from oil. [ID:nN15356986]
U.S. weekly oil inventory data due later in the day is expected to show that crude oil stocks probably rose for the third straight week, gaining 1.9 million barrels, while distillate and gasoline stocks also increased amid weak demand, an expanded Reuters poll showed. [EIA/S]
The data is to be announced at 11 a.m. EDT (1500 GMT), a day later than usual due to Columbus Day on Monday.
Hurricane Omar, which disrupted shipments from Venezuela this week, strengthened into a major Category 3 storm on Thursday as it headed toward Puerto Rico and the northeastern Caribbean, but was on a northeast trajectory away from the U.S. Gulf, the National Hurricane Center said. [ID:nN15353085]
Processing units at the 500,000 barrel-per-day Hovensa refinery on St. Croix in the U.S. Virgin Islands, a large supplier of gasoline and heating oil to the U.S. East Coast, were being shut down ahead of Omar's arrival, Hess Corp said. (Reporting by Chua Baizhen and Osamu Tsukimori in TOKYO; Editing by Clarence Fernandez)
