Oil drops 7 pct on US stock build

Oil dropped 7 percent, on Wednesday, touching a new 16-month low as rising U.S. fuel inventories and a jump in the dollar exchange rate added to signs a global economic slowdown has dragged down demand.

Stocks, currencies, oil and commodities tumbled on Wednesday and governments from Budapest to Buenos Aires took emergency action to rescue their economies from the worst financial crisis in 80 years.

U.S. crude fell $5.08 to $67.10 by 14:17 p.m. EST (1756 GMT), after earlier touching $66.20, its lowest since June 14, 2007.

London Brent crude traded down $4.90 to $64.82.

Oil has plunged more than 50 percent from its record high above $147 in July as the financial crisis has cut energy demand in top energy consumer the United States and other industrial countries.

Data from the U.S. Energy Information Administration showed U.S. product demand over the four weeks ending Oct. 17 fell 8.5 percent from a year ago, while inventory swelled.

U.S. crude oil inventories rose 3.2 million barrels in the week to Oct. 17, above analyst expectations for a 2.6 million build. Distillate inventories leaped by 2.2 million barrels while gasoline inventories rose by 2.7 million barrels.

"The numbers look bearish on virtually all fronts," said Jim Ritterbusch of Ritterbusch & Associates. "The data reinforces our bearish view and ups the probability of $62 crude," he said.

The U.S. dollar hit a two-year high against a basket of currencies, pressuring commodities accross the board. The Reuters-Jefferies CRB index, a global commodities benchmark, sank to four-year lows on growing recession fears.