NEW YORK (Dow Jones)--Crude oil futures prices settled down sharply Wednesday on fresh signs of rising U.S. oil inventories and continued weak demand.

Light, sweet crude oil for November delivery on the New York Mercantile Exchange settled down 3.9%, or $2.79 lower, at $68.97 a barrel. The drop was the biggest one-day decline since Aug. 14 and prices ended at the lowest level since Sept. 14. ICE Brent crude oil for November delivery settled down 3.6%, or $2.54 a barrel, at $67.99 a barrel.

U.S. oil inventory data for the week ended Sept. 18 bucked analysts' expectations, showing a sharp rise of 2.855 million barrel rise in crude oil stocks, while analysts had expected a drop of 1.5 million barrels. Refiners trimmed crude oil processing rates by more than expected, while lifting imports by 10% in the week, the federal Energy Information Administration data showed.

Stocks of distillate fuel (diesel and heating oil) rose by 3 million barrels, nearly twice the expected level, while gasoline stocks ballooned by 5.4 million barrels when a rise of just 400,000 barrels had been forecasted.

There is "absolutely nothing supportive in this report," said Michael Wittner, head of global oil market research at Societe Generale in London.

While inventories swelled, weekly oil demand dropped 3.3% to 18.5 million barrels a day, the lowest level since June 26, the EIA data showed. Demand for gasoline, the most widely used petroleum product in the biggest energy consuming nation, dropped 2.3% in the week to 8.8 million barrels a day, the lowest level since Jan. 23.

Ahead of winter, stocks of distillate fuel continue to stand at their highest level since January 1983. "I don't know if we can get a cold enough winter that market needs to get rid of this inventory," said Tom Bentz, a broker and analyst at BNP Paribas in New York.

High stocks and weak demand will continue to keep pressure on prices, which have been in a $65-$75 range for the past two months, bouncing between oversupply concerns and hopeful signals of economic recovery.

Traders said the decision by the Federal Open Market Committee on Wednesday to keep interest rates steady was expected.

Crude futures settled below the 100-day moving average at around $69.50 a barrel, which trigger still lower prices in coming days. A break of $68 a barrel, would set up a test of the $65 a barrel level for the first time since July.

October-delivery heating oil futures settled 2.9%, or 5.27 cents, lower at $1.7594 a gallon.

RBOB gasoline blendstock futures for October-delivery settled down 4.3%, or 7.67c lower at $1.7049 a gallon, the lowest level since July 14.

More information on settlements and highs and lows for futures on Nymex and ICE platforms can be found by searching for the following headlines:

Nymex Light Crude Oil Close

Nymex Harbor RBOB Gasoline Close

Nymex Heating Oil Close

ICE Brent Crude Oil Close

ICE Gas Oil Close

-By David Bird, Dow Jones Newswires; 212-416-2141; david.bird@dowjones.com