June 24 (Bloomberg) -- Crude oil fell below $69 in New York as Japanese exports dropped and an industry report showed an increase in U.S. gasoline inventories, raising concern the global recession will sap fuel demand.

The amount of goods sold from Japan, the world’s third- largest oil consumer, accelerated a decline in May, casting doubt on the economy’s growth prospects. Gasoline supplies increased 3.7 million barrels last week, the industry-funded American Petroleum Institute said yesterday.

“It’s still a dark picture,” Gerrit Zambo, an oil trader at BayernLB, said by phone from Munich. “The economic numbers of the past weeks don’t back up the recent rise in the oil price.”

Crude oil for August delivery fell as much as $1.18, or 1.7 percent, to $68.06 a barrel in electronic trading on the New York Mercantile Exchange and traded at $68.48 a barrel at 1:12 p.m. in London. Prices rose to a seven-month high of $73.23 on June 11.

Brent crude for August settlement declined as much as $1.22, or 1.8 percent, to $67.58 a barrel on London’s ICE Futures Europe exchange. It last traded at $68.05 a barrel.

Japanese exports fell 40.9 percent from a year earlier, more than the 39.1 percent drop in April, the Finance Ministry said today in Tokyo.

“Unless we start to see sequential GDP growth, it’s going to be very hard to sustain these high prices,” Francisco Blanch, head of global commodity research at Banc of America Securities-Merrill Lynch, said in a Bloomberg Television interview. “We’ve run out way too far.”

‘Mid-Cycle Price’

“Seventy-dollars a barrel is a mid-cycle price,” he said. “It’s not a price we should have at a time when the recovery isn’t yet being seen through.”

The U.S. Energy Department is expected to report that supplies of crude oil dropped 950,000 barrels, according to the median of 14 analyst responses in the Bloomberg News survey. Stockpiles fell 3.87 million barrels in the week ended June 12, the department said last week.

Inventories of gasoline and distillate fuel, a category that includes heating oil and diesel, increased, according to the respondents. The department is scheduled to release its weekly report today at 10:30 a.m. in Washington.

“A rise in gasoline inventories and a lower than expected drop in crude supplies will help suppress the price of crude oil,” Mike Sander, an investment adviser with Sander Capital in Seattle, said in an e-mail.

Gasoline Stockpiles

Gasoline stockpiles increased to 211.4 million barrels in the week ended June 19, while crude supplies fell 72,000 barrels to 356.6 million, according to the API report. Distillate fuel stockpiles rose 2.3 million barrels to 153.9 million, the reports said.

The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the energy Department for its weekly survey.

Gasoline for July delivery dropped as much as 4.82 cents, or 2.6 percent, to $1.845 a gallon.

OPEC won’t reduce crude oil production when it meets in September and will ask for more compliance with existing quotas, Kuwaiti Oil Minister Sheikh Ahmed al-Abdullah al-Sabah said yesterday.

The group plans to meet on Sept. 9 in Vienna. The Organization of Petroleum Exporting Countries agreed at three meetings last year that the 11 members with production targets would cut output by 4.2 million barrels a day.

To contact the reporters on this story: Rachel Graham in London rgraham13@bloomberg.netBen Sharples in Melbourne at bsharples@bloomberg.net

Last Updated: June 24, 2009 08:14 EDT