NEW YORK (Dow Jones)--Crude oil futures sank below $70 a barrel as doubts about China's economic growth spread from the Shanghai exchange to global commodities and equities markets.

Light, sweet crude for October delivery settled $2.78, or 3.8%, lower at $69.96 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled $3.14, or 4.3%, lower at $69.65 a barrel.

The Shanghai Composite share index, China's leading stock market indicator, fell by nearly 7%, on growing concern that tightening credit markets or a decline in government stimulus could slow the country's growth rate. The fall prompted a smaller decline in the Dow Jones Industrial Average, which was recently off 0.8% at 9470, as well as declines in other commodities, including soybeans.

Tumbling stocks in Asia took an especially heavy toll on the oil market, which has relied on an optimistic view of the region's economic outlook to support a steady increase in prices since February. China, the second-biggest oil consumer after the U.S., was the source of a major portion of new oil demand during crude's long rise to a record above $145 a barrel last summer.

Share prices in China are viewed as a major forward-looking indicator, particularly among investors skeptical of official government statistics showing strong second-quarter growth.

"For.... months now you can come in at 7 a.m. in New York and have an idea of what the direction is going to be in the market by what equities did overnight, particularly in Asia," said Addison Armstrong, an analyst with Tradition Energy in Stamford, Conn.

"I'm a little bit surprised it took (oil) this long" to drop, considering that the Shanghai index was down by over 20% in August, Armstrong added.

Oil's decline was made easier by light trading volume, with larger blocks of trades exerting a bigger influence over prices. Many London traders took off for a national bank holiday, while activity is expected to be light in the U.S. in the days leading up to the long Labor Day holiday weekend.

"On any day that you're going to have low liquidity and there's going to be a move in the market, that move is generally going to be exaggerated," said Morgan Downey, a commodities trader with Standard Chartered PLC in New York.

The market's fate this week is likely tied to the ability for share prices in China to recover, market participants said. U.S. oil inventory data, due out Wednesday from the Department of Energy, are also something of a wild card. Oil stockpiles were roughly flat last week, after unexpectedly plunging by 8.4 million barrels the week before.

Analysts expect supplies to tighten again in the latest data, giving an average forecast for a 300,000-barrel drop in oil inventories, according to a Dow Jones Newswires survey. Gasoline stocks are seen falling 600,000 barrels, while distillate inventories, including heating oil and diesel, are expected to rise by 900,000 barrels. Refineries are seen increasing utilization by 0.4 percentage point to 84.5% of capacity.

Front-month September reformulated gasoline blendstock, or RBOB, settled at $1.9859 a gallon, down 7.59 cents, or 3.7%. September heating oil settled 8.11 cents, or 4.4%, lower at $1.7792 a gallon. Both contracts expired at settlement.

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 Brian Baskin, Dow Jones Newswires; 212-416-2453;