NYMEX crude slumps $3 on economic worries

NEW YORK (Reuters) - U.S. crude oil futures fell more than $3 as signs of slowing economic growth raised worries that demand for petroleum products could be impaired.

Crude's huge loss dragged down gasoline and heating oil futures as well.

"The bottom line is that the market fears that a slowdown in the economy could slow the demand for oil," Phil Flynn, analyst at Alaron Trading in Chicago, wrote in a research note.

The day's heavy losses comes as industry analysts predict that Wednesday's U.S. government petroleum inventory data would show that refined product inventories rose while crude stocks fell last week.

On the New York Mercantile Exchange at 2:15 p.m. EDT (1815 GMT), September crude CLU7 skidded $2.95 or 3.9 percent to $72.53 a barrel, trading between $72.40 and $75.10. The day's was the cheapest since July 13's $72.26.

Technical support was charted at $72.20 and futures fell early below the 20-day moving average of $75.06. Resistance was put at $75.48.

Last Wednesday's intraday high of $78.77 eclipsed the previous $78.40 record hit on July 14, 2006.

In London, September Brent LCOU7 slid $3.10 or 4.2 percent to $71.65 a barrel, trading from $71.43 to $74.73.

NYMEX September RBOB gasoline RBU7 fell 8.02 cents or 3.9 percent to $1.9488 per gallon, trading $1.9455 to $2.0183. The low was the weakest since the March 22 low of $1.93.

NYMEX September heating oil HOU7 tumbled 7.73 cent or 3.8 percent to $1.9564 a gallon, trading from $1.9548 to $2.0348. The intraday low was the weakest since June 13, when prices fell to $1.9042.

Support charted at $2.00 per gallon for both products was breached in early trading.

The U.S. Energy Information Administration releases its oil inventory report Wednesday at 10:30 a.m. EDT (1430 GMT).

A Reuters preliminary analyst poll on Monday yielded a forecast for crude supplies to have fallen 2.3 million barrels, which would be a fifth straight report with crude supply down.

Distillate supplies were expected to be up 1.6 million barrels. Gasoline inventories also were forecast to be up, by 900,000 barrels, with refinery capacity use expected to be slightly higher, up only 0.1 percentage point.

U.S. blue-chip stocks rose on Monday, helped by gains in shares of companies seen likely to fare better if the economy keeps weakening due to the housing downturn. .N

But trading was volatile on concerns about a credit squeeze and worries of more losses tied to the subprime mortgage market.

The signs of economic slowdown in the United States knocked copper to five-week lows on Monday, but analysts expect strong demand from China to buoy the metal used widely in the construction and power industries.

Despite calls from the United States and the International Energy Agency -- adviser to 26 industrial nations -- OPEC officials have indicated a reluctance to raise output when ministers meet in September.

Saudi Arabia has raised the official selling prices (OSPs) of its heavier crudes in September by more than expected for Asian buyers, traders said on Monday.

Saudi Arabia also raised prices to Europe but cut the OSPs sharply for supplies to the United States.

In U.S. refinery news, Valero's Port Arthur, Texas, refinery had a fire in a naphtha pre-treating unit near a coker unit on Sunday, the company said on Monday.

Valero said all units were up and running on Monday except the naphtha pre-treater, where the fire was contained.

Chevron Corp. (CVX.N) shut two sulfur recovery units and one hydrotreater at its Pascagoula, Mississippi, refinery late last week for 7 to 10 days of unplanned work, according to trading sources.