NEW YORK - Oil prices fell nearly 1 percent to below $35 a barrel on Wednesday as dealers bet that slumping fuel demand in top consumer the United States has forced crude inventories to an 11-year high.

U.S. crude for March delivery slipped 31 cents to settle at $34.62 a barrel, while U.S. crude for April delivery fell $1.13 to $37.41 and London Brent for April delivery fell $1.48 to $39.55.

The losses came as dealers anticipated a report from the American Petroleum Institute to be released Wednesday afternoon would show crude stockpiles in the United States rose last week by 3 million barrels to the highest since May 1998.

Oil stocks in the world's largest energy consumer have already risen by 20 percent since September as the economic downturn crushes business and consumer demand, helping pull oil prices more than $110 off their peaks last summer.

The U.S. Energy Information Administration will release a separate report on U.S. inventories Thursday. The EIA report is widely seen as more accurate than the API's because U.S. energy firms are required to participate.

Oil's losses tracked a decline in the U.S. stock market after data showed U.S. housing starts and building permits dropped to record lows in January, signaling a potential deepening of the recession.

The White House on Wednesday unveiled a $275 billion plan aimed at stemming foreclosures in the slumping housing sector.

Weakness in the global economy and sliding demand for energy have rung alarm bells for the Organization of the Petroleum Exporting Countries, which has been seeking to cut 4.2 million bpd of output since September to prop up oil prices.

Several members of the group have signaled the cartel could deepen its cuts when it next meets March 15 in Vienna.

U.S. Energy Secretary Stephen Chu said on Wednesday that he would not weigh in on whether OPEC should cut production, saying such consultation was not in my domain.

The comment marked a shift from previous U.S. energy secretaries who met regularly with the energy ministers of OPEC's member nations, discussed the oil market and expressed both privately and publicly the U.S. position on OPEC production levels.

(Additional reporting by Christopher Baldwin in London, Dharmasari Haroun and Chua Baizhen in Singapore; editing by Jim Marshall)