Oil dips below $69

LONDON: World oil prices sank under 69 dollars on Wednesday as traders fretted over fresh losses on global stock markets ahead of the latest weekly US energy reserves report.

New York's main futures contract, light sweet crude for delivery in September, was down 39 cents to 68.80 dollars a barrel.

Brent North Sea crude for October delivery dipped 60 cents to 71.77 dollars a barrel in midday London trade.

"Crude prices were trading lower (on Wednesday), relinquishing earlier gains as crude markets continue to take its cue from equity markets, which are weaker today," said Sucden analyst Nimit Khamar.

Oil had rebounded strongly on Tuesday in line with firmer stock markets and a weaker greenback, which can stimulate demand for dollar-priced crude from investors holding rival currencies.

Asian and European equities slid on Wednesday as financial markets endured a roller-coaster week amid uncertainty surrounding the economic recovery, traders said.

Chinese share prices tumbled by 4.30 percent on Wednesday as resources companies plunged amid concerns over declining international commodity prices, dealers said.

And Tokyo's benchmark Nikkei-225 index closed down 0.79 percent on Wednesday, hit by a stronger yen and worries about recent falls in Shanghai.

Later today, the US government's Department of Energy (DoE) will release its weekly report on crude stockpiles in the world's largest energy consuming nation.

Analysts polled by Dow Jones Newswires predict that US crude inventories will have risen by 1.5 million barrels in the week ending August 7.

Gasoline or petrol reserves are forecast to drop 800,00 barrels while distillates -- including heating fuel and diesel -- are expected to rise by 500,000 barrels.

"We still expect to see rising crude stockpiles and declining gasoline inventories, but think that refining rates will remain more or less unchanged," said VTB Capital analyst Andrey Kryuchenkov.

Also on Wednesday, Hurricane Bill strengthened to a powerful category four storm with wind speeds near 135 miles per hour (215 kilometres per hour) but risk of oil transport disruptions were thought to be low, experts said.

"Market participants are also keeping an eye on Hurricane Bill, the first hurricane of the 2009 season, which has quickly grown into a Category 4 hurricane," said Khamar.

"Hurricane Bill is headed for Bermuda and the eastern US coast, so is not threatening to the oil and gas installations in the Gulf of Mexico and would unlikely effect crude prices; especially given energy stocks are ample."