Oil dropped well over a dollar to below $62 a barrel on Wednesday, placing it on course for a sixth consecutive fall and the longest losing streak since mid-December, after U.S. data showed a big rise in fuel stocks.

An OPEC report predicting it could take years for demand for its crude to recover from the financial crisis added to bearish sentiment.

U.S. light crude for August delivery dropped $1.24 to $61.69 a barrel by 1444 GMT. It settled $1.12 lower at 62.93 a barrel on Tuesday, ending a fifth straight day of losses.

London Brent crude fell $1.15 to $62.08.

U.S. government weekly data showed gasoline stocks had risen by 1.9 million barrels, more than expectations for a 600,000 barrel increase.

Distillate stocks, including diesel, climbed by 3.7 million barrels, compared with an expected two million barrel rise. They stood at their highest level in nearly 25 years.

Figures from the American Petroleum Institute (API) late on Tuesday also showed distillate stocks and gasoline stocks had risen more than expected.

It looked like gasoline demand had started to get better and now suddenly looks bad. It could be for a couple of reasons: it could be a price response or it could just be that the economy is just not out of the woods yet, said Tony Nunan, risk manager at Mitsubishi Corp in Tokyo.

Oil prices have dropped from peaks above $70 a barrel last month, the highest this year, as expectations of an early economic recovery have faltered and U.S. fuel stocks have risen in line with subdued demand.


The market was also monitoring the meeting of the Group of Eight major industrialized nations in the central Italian city of L'Aquila, which continues until Friday.

Oil analysts largely dismissed the G8 calls for reduced volatility in energy markets.

They said a statement from U.S. regulator the CFTC this week that it was considering tougher position limits to try to curb speculation was far more significant. It could add to selling pressure, although it would take months for any regulatory changes to take effect, they said.

It does dampen sentiment, said Mike Wittner of Societe Generale.

Analysts said the impact would be greater on U.S. crude than on the European benchmark Brent, which is mostly overseen by British regulator the FSA.

Brent's current premium to U.S. crude could also be explained by the disruption of supplies of Nigerian oil, which has helped to boost other Atlantic basin crudes, including Brent.

Nigeria's most prominent militant group said on Wednesday it had sabotaged oil pipelines, as it deepened a six-week long offensive against Africa's biggest energy industry.

The enforced shut-in of Nigerian crude has helped to tighten supplies from the Organization of the Petroleum Exporting Countries.

Discipline from the group has lapsed and compliance with agreed output curbs has been estimated at around 75 percent, down from peaks of roughly 80 percent earlier this year.

OPEC's 2009 World Oil Outlook released on Wednesday said consumption of its crude would not return to 31 million barrels per day (bpd), the level it averaged in 2008 before the economic crisis cut oil use, until 2013.

In the medium term, consumption would fall to 84.2 million bpd this year from 85.6 million bpd last year, and rise to 87.9 million bpd by 2013, the report said. The 2013 figure was 5.7 million bpd less than previously expected.

(Additional reporting by Maryelle Demongeot in Singapore; editing by James Jukwey)