Sept. 8 (Bloomberg) -- Crude oil and heating oil tumbled to five-month lows, and gasoline fell, on signs that U.S. fuel inventories will be sufficient as economic growth in the world's biggest energy consumer slows.

``The geopolitical picture is quieter than it has been and there is no fundamental reason for prices to rise,'' said Michael Fitzpatrick, vice president for energy risk management at Fimat USA in New York. ``There is ample crude oil around, refineries are operating at high levels and the economy is slowing, which will depress demand.''

Crude oil, heating oil, diesel and gasoline supplies last week were above the five-year average, according to the Energy Department. The faltering U.S. housing market will be a drag on economic growth, an analyst survey showed. Concern that sanctions would be imposed on Iran after an Aug. 31 deadline to stop uranium enrichment helped to bolster prices last month.

Crude oil for October delivery plunged $1.07, or 1.6 percent, to $66.25 a barrel on the New York Mercantile Exchange, the lowest close since April 4. Prices fell 4.2 percent this week.

Heating oil for October delivery slipped 4.44 cents, or 2.4 percent, to $1.8432 a gallon, the lowest close since March 28.

Crude-oil supplies fell 2.21 million barrels to 330.6 million in the week ended Sept. 1, leaving inventories 12 percent higher than the five-year average, the Energy Department said yesterday. Refineries operated at 93.6 percent of capacity, the highest since June.

Fuel Stockpiles

Supplies of distillate fuel, a category that includes heating oil and diesel, rose 3.1 million barrels to 139.9 million barrels last week. The gain left stockpiles 7.7 percent higher than the five-year average.

``The distillate numbers are certainly reassuring to folks,'' said Rick Mueller, an analyst with Energy Security Analysis Inc. in Tilburg, the Netherlands. ``We are going into the heating season with rising stocks.''

Gasoline inventories rose 718,000 barrels to 206.9 million, leaving supplies 4.2 percent higher than the five-year average.

Gasoline for October delivery declined 3.19 cents, or 1.9 percent, to $1.6098 a gallon, the lowest close since Feb. 28. Pump prices have followed futures lower. Regular gasoline, averaged nationwide, is down 11 percent from a year ago, the AAA, the nation's largest motorist organization, said. Gasoline fell 1.7 cent yesterday to an average $2.683 a gallon.

Commodity Prices Fall

Metal markets joined energy in declining today amid signs of slowing demand. Gold touched a two-month low, palladium plunged 6 percent, its biggest loss since June, and copper prices fell the most in three weeks.

The declines sent the Goldman Sachs Commodity Index to its second straight weekly decline. The Reuters-Jefferies CRB index of 19 commodities fell 1 percent to 320.39, the lowest since March 22.

Oil has fallen 15 percent since reaching a record $78.40 on July 14 on concern that fighting in Lebanon could spread to other countries in the Middle East, source of almost a third of the world's oil. Israel is prepared to lift its blockade of Lebanese ports today, about 24 hours after it ended a ban on flights, as naval forces moved in to prevent unauthorized arms shipments.

``The Aug. 31 deadline came and went with no action taken,'' Mueller said. ``Some of the risk that had been added to the price is now being removed.''

European Union foreign policy chief Javier Solana said there will be no United Nations sanctions against Iran as long as talks over the country's nuclear program continue, Agence France-Presse reported.

Meeting on Iran

Diplomats from the UN Security Council and Germany met in Berlin yesterday to decide whether to punish Iran for refusing to stop uranium enrichment by the Aug. 31 deadline. They will discuss the matter again on Sept. 11, U.S. Undersecretary of State Nicholas Burns said today in Berlin. The U.S. wants a draft resolution as early as next week, Burns said.

Iran has the second-biggest proved oil reserves and almost a quarter of the world's oil flows through the Strait of Hormuz, a narrow waterway between Iran and Oman at the mouth of the Persian Gulf.

``The upside risks in the short-term are hurricanes and Iran,'' said Craig Pennington, global leader of energy research at Schroders Plc in London. ``When it comes to Iran, it looks like there will be a lot of talk about sanctions but no action.''

Tropical Storm Florence, the sixth named storm of the Atlantic hurricane season, is heading toward Bermuda and is not expected to veer toward Gulf of Mexico oil fields, according to the National Hurricane Center. By this time last year 15 named storms had developed in the Atlantic, seven of them hurricanes.

Prices may fall on speculation that U.S. fuel inventories are sufficient to meet demand in coming months, according to a Bloomberg News survey. Nineteen of 40 analysts and traders surveyed, or 48 percent, said prices will decline next week. Ten projected an increase and 11 said futures would be little changed.

OPEC Meeting

The Organization of Petroleum Exporting Countries should leave production unchanged when it meets Sept. 11 in Vienna, said Shokri Ghanem, chairman of Libya's National Oil Corp. It's too soon to think about cuts, Ghanem said in an interview. OPEC spare capacity is insufficient to lower prices, he said.

Brent crude oil for October settlement slipped $1.20, or 1.8 percent, to $65.33 a barrel on the London-based ICE Futures exchange, the lowest close since March 28.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

Last Updated: September 8, 2006 16:11 EDT