LONDON (Reuters) - Oil fell on Tuesday, pressured by expectations that a global recession will crush demand for oil, which could limit the impact of any supply cuts by OPEC.
U.S. light crude for November delivery was down $2.75 at $71.50 a barrel by 1333 GMT (9:33 a.m. EDT), after earlier hitting a session high of $75.69.
The market hit a record high above $147 in mid-July.
London Brent crude was $2.75 down at $69.28 a barrel.
The Organization of the Petroleum Exporting Countries is due to meet in Vienna on Friday, when the producer group is expected to reduce output to defend prices.
Iran has said a drop in demand could push OPEC to cut output by 2-2.5 million barrels per day.
OPEC is meeting after a 50 percent fall in oil prices in just three months from a record peak above $147. The sharp drop partly reflects falls in demand from the United States, the world's top energy consumer and other industrial countries, which are suffering the effects of the credit crisis.
"A cut of about 2 million barrels per day will only offset the amount of U.S. demand that has been lost on a year-over-year basis," said Edward Meir of broker MF Global.
"This leaves no extra barrels to offset the demand vaporization that is almost certainly taking place in other consuming markets," he said.
OPEC could face an intense debate at their meeting on how much oil they should take off global markets as they balance their price needs against risks to a fragile world economy.
The International Energy Agency, which advises industrialised countries, has said an OPEC output cut could prolong a global economic slowdown.
OTHER MARKETS
Oil and other commodities have been tracking moves in equity markets in the past few weeks.
"I think they moved in line with equities yesterday and are now pulling back, using stock markets as a barometer for demand," said Christopher Bellew at Bache Commodities.
European shares gave up early gains that had followed a rise in U.S. stock markets on Monday on hopes of more government aid to the economy.
U.S. stocks opened lower, weighed down by gloom about the impact of a U.S. economic slowdown on company profits.
Meir said commodities and equities had become very closely correlated. "This is a strong relationship that will likely override other factors in the short-term, including efforts by OPEC to take control of a market that has slipped away from it with alarming speed," Meir said.
The U.S. dollar was near 1-1/2 year high versus a basket of currencies, which put pressure on dollar-denominated commodities, including oil and gold..
U.S. crude oil inventories probably rose 2.3 million barrels last week, a preliminary Reuters poll showed ahead of the U.S. government energy data due on Wednesday.
The poll also showed forecasts for a 100,000-barrel rise in distillate inventories, which include heating oil and diesel, and a 2.1 million barrel gain in gasoline supplies.
(Additional reporting by Fayen Wong in Perth; editing by Peter Blackburn)
