By Christian Schmollinger and Grant Smith Oct. 16 (Bloomberg) -- Crude oil fell for a third day, taking the decline from its July record to more than 50 percent, as plunging global stocks heightened concern bank bailouts won't prevent a recession. Oil, which has followed movements in equity markets this month, traded below $72 a barrel as benchmark indexes from Tokyo to Budapest slumped more than 4 percent. The U.S. Energy Department will probably say today that crude and gasoline inventories rose this week, a Bloomberg survey showed, as tightening credit erodes consumer demand. ``Traders are unnerved by the thought that the U.S. government may be running out of ammunition,'' said Robert Laughlin, senior broker at MF Global Ltd. in London. ``There's talk of hedge funds closing positions to meet redemptions.'' Crude oil for November delivery fell as much as $3.33, or 4.5 percent, to $71.21 a barrel in electronic trading on the New York Mercantile Exchange, the lowest since Aug. 29, 2007. It was at $73.13 a barrel at 12:54 p.m. London time. Prices are down 18 percent from a year ago and have dropped 51 percent from the record $147.27 a barrel reached on July 11. Credit Suisse Group and Sanford C. Bernstein & Co. cut their 2009 oil price forecasts in separate reports today. Bernstein lowered its 2009 crude oil price forecast to $70 a barrel from $90 a barrel, while Zurich-based Credit Suisse reduced its next-year estimate by 32 percent to $75. The Organization of Petroleum Exporting Countries, due to review production targets on Nov. 18, cut its 2009 demand forecast yesterday by 450,000 barrels a day, or 0.5 percent, to 87.21 million barrels a day because of ``dramatically worsening'' financial market conditions. `Not Pretty' ``Demand in not just energy but across all consumer products is going to be hit,'' said Jonathan Kornafel, a director for Asia at Hudson Capital Energy in Singapore. ``That's just going to export recession to Asia and the manufacturing economies. 2009 is not going to be pretty.'' Hedge-fund managers and other large speculators decreased their bets that New York crude-oil futures will rise in the week ended Oct. 7, according to U.S. Commodity Futures Trading Commission data. Net-long positions fell by 36,403 contracts, or 91 percent, from a week earlier. Citadel Investment Group Inc.'s biggest hedge fund fell as much as 30 percent this year, said two people familiar with the Chicago-based firm. Efforts to calm financial markets probably won't result in an immediate economic rebound, Federal Reserve Chairman Ben S. Bernanke told the Economic Club of New York. Last week, the International Energy Agency, an adviser to 28 nations, lowered its projection for global oil demand next year by 0.5 percent to 87.2 million barrels a day. Gasoline Inventories A government report today will show that U.S. crude-oil and gasoline inventories rose last week, according to the median of responses by analysts in a Bloomberg News survey. The report will be released a day late because of the Columbus Day federal holiday Oct. 13 in the U.S. Hovensa LLC, operator of the third-biggest refinery in the Americas, was to close processing units at its St. Croix, U.S. Virgin Islands, facility because Hurricane Omar was forecast to hit the islands. Brent crude oil for November settlement declined as much as $3.63, or 5.1 percent, to $67.17 a barrel on London's ICE Futures Europe exchange, the lowest since May 31, 2007. The November contract expires today. The more-active December futures fell as much as $3.74, or 5.2 percent, to $68.84 a barrel. To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net. To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

Source