LONDON (Reuters) – Oil prices fell by 3.7 percent towards $69 a barrel yesterday as further signs of weak fuel demand raised expectations that prices may have raced ahead of the nascent economic recovery.

Oil prices have more than doubled since hitting lows near $30 a barrel at the height of the global economic crisis, but the market has come under pressure since touching a year high of $75 a barrel almost a month ago.

"There will be little or no sustained upward pressure on oil prices until global economic recovery is firmly established and reviving oil demand begins to draw down bulging oil inventories," analysts at the Centre for Global Energy Studies said in their monthly oil market report yesterday.

"Even next year prices are unlikely to rise much unless clear signals emerge that the world is pulling out of recession in a sustainable fashion."

US crude for October delivery fell $2.67 to $69.37 a barrel by 1740 GMT, having earlier hit a low of $68.91. London Brent crude fell $2.85 to $68.47 a barrel.

Oil stockpiles have risen around the world as the global economic crisis has cut sharply into energy demand.

The International Energy Agency said world electricity output was likely to drop this year for the first time since 1945, while Sinopec, Asia's top oil refiner, said demand for industrial fuels remains depressed in China, the world's second largest oil consumer.

"Global oil demand is only slowly picking up and as of right now not at a fast enough pace to move overstocked inventories into a destocking pattern that will push inventories down to more normal levels," said Dominick Chirichella, senior partner at Energy Management Institute.