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'Gas heading below $3'

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NEW YORK (CNNMoney.com) -- The price of oil fell Thursday, shedding more than half its value since the summer's highs, after a government supply report signaled weak demand for petroleum products.

Light, sweet crude for November delivery fell $4.69 to $69.85 a barrel on the New York Mercantile Exchange. Oil is now down 52% from July's all-time high above $147 a barrel.

Thursday's closing price was the lowest since Aug. 23, 2007 when oil settled at $69.83 a barrel.

At one point during Thursday's session, the contract fell to $68.57 a barrel. That was the lowest intra-day level since June 27, 2007, when oil slid to $67.07 in New York floor trading.

Thursday's inventory report was "very bearish," said Phil Flynn, senior market analyst at Alaron Trading in Chicago. "There's a lot of supply hitting the market at a time when demand is questionable."

The oil market has been pressured recently by fears that a global economic recession will drive down the once-robust demand for energy.

Global stock markets have been volatile as governments worldwide have taken steps to restore confidence in the financial system. But investors appear focused on signs that the economy will remain weak even after the markets have stabilized.

Supplies. In its weekly inventory report, the Energy Information Administration said the nation's stockpiles of crude oil grew 5.6 million barrels in the week that ended Oct. 10. Analysts surveyed by energy research firm Platts were expecting the government to report an increase of 3.1 million barrels.

Gasoline stocks increased 7 million barrels, while supplies of distillates, used to make diesel fuel and heating oil, fell 500,000 barrels last week. The nation's supply of gas was expected to have grown by 3.1 million barrels and distillate stocks were forecast to decline 850,000 barrels.

Demand for gas averaged nearly 8.8 million barrels per day, over the last four weeks, according to the EIA. That's down by 5.2% from the same period last year.

The report also showed that total products supplied over the last four-week period has averaged 18.6 million barrels per day, down by 8.9% compared to the similar period last year.

The government report is normally released on Wednesday but was delayed due to the Columbus Day holiday on Monday.

OPEC. The Organization of the Petroleum Exporting Countries said Thursday that the "extraordinary meeting" it announced last week would be held nearly a month earlier than originally planned.

The meeting will now take place on Oct. 24. It was first scheduled for Nov. 18.

The change comes after OPEC's president, Chakib Khelil, reportedly said that the "ideal" price for oil is between $70 and $90 a barrel.

Moving up the meeting's date reflects the cartel's desire to put a floor under the rapidly declining price of oil by possibly cutting output, Flynn said. But Thursday's declines suggest that investors are more focused on demand issues than supply.

"The market is ignoring OPEC," Flynn said. "This is a demand-driven decline - a lack of demand."

Retail gas. Prices at the pump also fell Thursday.

The national average price for a gallon of regular gasoline fell 4.1 cents to $3.084 from $3.125 the day before, according to a daily survey by the American Automobile Association.

Gas prices have fallen 25% since the national average price toped $4.114 on July 17.

The average price of diesel fuel fell 3 cents overnight to $3.764.