Crude Oil Sets Fresh 16 Month Low

Crude oil set a 16-month low Wednesday falling $5.43 to $66.75 a barrel in New York, the lowest settlement since June 13, 2007.

U.S. fuel demand during the past four weeks was down 8.5 percent from a year ago, according to an Energy Department report yesterday.

U.S. gasoline demand averaged 8.8 million barrels a day over the past four weeks, down 4.3 percent from the same period last year, the report showed. Consumption of distillate fuel, a category that includes heating oil and diesel, averaged 3.9 million barrels a day, down 5.8 percent.

U.S. crude oil inventories rose 3.18 million barrels to 311.4 million barrels, the report showed. It was the fourth- straight increase. A gain of 2.65 million barrels was forecast, according to the median of responses in a Bloomberg News survey.

Gasoline stockpiles jumped 2.7 million barrels to 196.5 million barrels, which was in line with analyst's estimates. Distillate fuel supplies climbed 2.2 million barrels to 124.3 million barrels, more than the 300,000 barrel forecast.

OPEC meet Friday to discuss output cuts. It is seeming more and more likely that a cut of the anticipated 1m barrels/day will not be sufficient to support prices. Even a cut of 2m barrels/day may not be enough. Demand is what needs to be stimulated, and in the current economic environment that seems unlikely to happen any time soon.