NEW YORK: Crude oil fell to the lowest close in more than five weeks after a report showed that the US economy grew at a slower pace than previously estimated and on forecasts that supplies gained.

Oil retreated after the Commerce Department said that the economy expanded at a 2.8% annual rate in the third quarter, down from a prior estimate of 3.5%. The U.S. Energy Department will probably report tomorrow that crude-oil supplies climbed by 1.5 million barrels in the week ended Nov. 20, according to a Bloomberg News survey.

"As long as there are tepid headlines about the economy, oil is going to be under pressure," said Michael Fitzpatrick, vice president of energy with MF Global in New York. "We seem to be attracted to the lower end of the recent range and will probably test it before long."

Crude oil for January delivery declined $1.54, or 2%, to $76.02 a barrel on the New York Mercantile Exchange, the lowest settlement since Oct. 14. Prices have gained 70% this year. Futures have traded between $74.79 and $82 since Oct 15.

Prices were down from the settlement after the American Petroleum Institute reported at 4:30 p.m. that U.S. crude-oil stockpiles increased 3.35 million barrels to 336.4 million. January oil slipped $1.67, or 2.2%, to $75.89 a barrel in electronic trading at 4:31 p.m.

Transactions may be lighter than normal through the end of the week because of this week's U.S. Thanksgiving holiday. There will be no floor trading on Nov. 26 and the market will close early on Nov. 27.

Increasing Volatility

"I'm not getting excited about anything I see this week as far as price action is concerned," said Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania. "Volume and liquidity are down, so volatility is going to be through the roof."

The Standard & Poor's 500 Index declined 0.1% to 1,105.26 and the Dow Jones Industrial Average slipped 0.2% to 10,431.07 at 2:30 when Nymex floor trading ended.

"The GDP was a little disappointing and that put pressure on stocks," said Phil Flynn, vice president of research at PFGBest in Chicago. "The fundamentals of this market are terrible and it's been held higher by what's happening elsewhere. The move is bigger than what we would normally see because the volume is so light."

Analysts were split over whether U.S. distillate supplies, a category that includes heating oil and diesel, rose or fell last week. Stockpiles were probably unchanged at 167.4 million barrels, according to the median of 17 responses in the survey. Gasoline inventories probably increased 300,000 barrels from 209.1 million.