By Margot Habiby Sept. 21 (Bloomberg) -- Oil fell the most in a week, dipping below $70 in New York, as a stronger dollar and slipping equity markets reduced investor demand for crude. Oil declined and the dollar rose to a one-week high against the yen on forecasts that a report today will show leading indicators gained for a fifth month. Traders are paying more than ever in the options market to protect against a steeper plunge in crude prices, according to five years of data compiled by Banc of America Securities-Merrill Lynch. “You have to keep watching the dollar and the equities markets, and we’re going to piggyback on the way they go,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. Crude oil for October delivery fell $2.49, or 3.5 percent, to $69.55 a barrel at 9:35 a.m. on the New York Mercantile Exchange. That was the biggest drop since a 3.7 percent decline on Sept. 11. The October contract expires tomorrow. The more- widely held November contract fell $2.56, or 3.5 percent, to $69.93 a barrel. The dollar strengthened to $1.463 per euro as of 9:38 a.m. in New York from $1.4712 on Sept. 18. It dropped to $1.4767 on Sept. 17, the weakest level since Sept. 25, 2008. U.S. stock indexes declined on concern the six-month rally in equities has outpaced the outlook for earnings and economic growth. Shares in Asia and Europe also retreated. The Standard & Poor’s 500 Index retreated 0.6 percent to 1,061.78 at 9:51 a.m. in New York. The Dow Jones Industrial Average index fell 0.6 percent to 9,761.33. Brent crude oil for November settlement declined $2.69, or 3.8 percent, to $68.63 a barrel on the London-based ICE Futures Europe exchange.

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