Oil fell for a third straight session yesterday, hitting a 13-month low near $71, as investors braced for a plunge in demand and economies teetered on the brink of recession.

Oil?s decline echoed global stock markets which dropped on yesterday. European stocks fell after Wall Street and Japan?s Nikkei both suffered their worst one-day losses since the stock market crash of 1987.

US crude for November delivery was $2.33, or 3.1 %, down at $72.21 a barrel at 0850 GMT. The front-month contract has lost nearly a third in value in three weeks, the steepest such decline since it began trading in 1983.

London Brent crude fell $2.80 to $68. ?Economic weakness is hitting the stock and oil markets, but the oil price fall is also reflecting a lack of demand. It is very difficult to buy oil if you are having a hard time getting credit lined up,? said Francisco Blanch, head of commodity research at Merrill Lynch. Crude has fallen by more than 50 % from its July peak above $147. Analysts have scaled back global demand growth estimates after a slew of gloomy data that has had a bigger market impact than OPEC talk of possible production cuts and a hurricane that has disrupted Caribbean refining operations.

Forecasts reduced

Joining a series of analysts in sharply chopping back forecasts, Bernstein Research cut its 2009 oil price view to $70 a barrel from $90 a barrel, while lowering its 2010 oil estimate to $80 from $95.

The Organization of the Petroleum Exporting Countries (OPEC) also reduced its forecasts for world demand for crude next year in its latest monthly report published on Wednesday. The producer group has called an emergency meeting in November in Vienna to assess the implications of the global financial crisis on the oil market.

Expectations have mounted it will want to lend support to a market that has been swept up in the deleveraging across commodity markets.

Venezuelan President Hugo Chavez said oil prices would probably keep falling as the US economy headed south. ?The price of oil is falling? Yes. The price will carry on falling? Probably. But Venezuela will not drown,? he said. Venezuela is one of the United States? biggest oil suppliers, with about half its government revenue derived from oil.

US weekly oil inventory data was released late yesterday and showed that crude oil stocks rose for the third straight week, gaining 1.9 million barrels, while distillate and gasoline stocks also increased following weak demand, a Reuters poll showed.

Hurricane Omar, which disrupted shipments from Venezuela this week, strengthened into a major Category 3 storm yesterday as it headed toward Puerto Rico and the northeastern Caribbean, but was on a northeast trajectory away from the US Gulf, the National Hurricane Center said.

Processing units at the 500,000 barrel-per-day Hovensa refinery on St. Croix in the US Virgin Islands, a large supplier of gasoline and heating oil to the US East Coast, were being shut down ahead of Omar?s arrival, Hess Corp said.