By Christian Schmollinger Oct. 28 (Bloomberg) -- Crude oil fell to near a 17-month low in New York as Asian stocks declined for a fifth day, increasing concern of a recession that may slash fuel demand. Stocks in Japan tumbled, following a decline in U.S. equities, as the country's largest listed bank said it would issue share to replenish depleted capital. Investors are selling their oil contracts after OPEC, the International Energy Agency and the U.S. Department of Energy cut projections for oil usage for this year and 2009. ``The stock markets are acting as a proxy for the demand outlook on the whole,'' said Toby Hassall, an analyst at Commodity Warrants Australia in Sydney. ``If we see the stock market post fresh new lows, that's an indication the slowdown will be deeper and longer.'' Crude oil for December delivery fell as much as $1.47, or 2.3 percent, to $61.75 a barrel on the New York Mercantile Exchange. It was at $62.82 a barrel at 12:52 p.m. Singapore time. The price yesterday dropped to an intraday low of $61.30 a barrel, the lowest level since May 9, 2007. Prices, which have tumbled 58 percent from a record $147.27 on July 11, are down 33 percent from a year ago. Yesterday, futures dropped 93 cents, or 1.4 percent, to close at $63.22 a barrel, the lowest settlement price since May 29, 2007. The Standard & Poor's 500 Index slipped 3.2 percent yesterday to 848.92. The Dow Jones Industrial Average slid 2.4 percent to 8,175.77. The MSCI Asia Pacific Index lost 0.3 percent to 74.94 as of 12:42 p.m. in Tokyo, extending a four- day, 19 percent slump. OPEC Cut ``There is still so much negative sentiment,'' said Jonathan Kornafel, a director for Asia at options traders Hudson Capital Energy in Singapore. ``Equities, crude and commodities all moving at the same pace, things that just aren't related at all. That's redemptions and people pulling their money out at the same time.'' Oil is heading for a 38 percent drop this month, the steepest since at least 1986 in New York, even after the Organization of Petroleum Exporting Countries cut oil production for the first time in almost two years. The 13 OPEC nations agreed to reduce supply by 1.5 million barrels a day starting in November. The OPEC price basket, an average of 11 crude-oil grades sold by the group, dropped to $57.57 a barrel on Oct. 24, the lowest since March 21, 2007. OPEC Production OPEC may make an additional output reduction if its Oct. 24 decision to lower production fails to bolster prices, said Mohammad Ali Khatibi, Iran's representative to the group, according to the country's state-run Mehr news agency. ``With this 1.5 million-barrel cut that the market just laughed at, I wouldn't be surprised to see them come out with another million barrel cut in December,'' said Hudson Capital's Kornafel. ``Everyone is getting out of the market, so there is no attention being paid to long-term fundamentals.'' The Energy Department will probably report tomorrow that U.S. supplies of crude oil, gasoline and distillate fuel, a category that includes heating oil and diesel, rose last week, a Bloomberg News survey showed. Brent crude oil for December settlement fell as much as $1.31, or 2.1 percent, to $60.10 a barrel on London's ICE Futures Europe exchange. It was at $60.72 at 12:49 p.m. Singapore time. The contract yesterday declined 64 cents, or 1 percent, to settle at $61.41 a barrel. To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.

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