Crude Oil Is Little Changed on Dollar Gain, Equity Markets Drop

June 16 (Bloomberg) -- Crude oil was little changed near $70 a barrel in New York after falling as the dollar rose, limiting investors’ need to buy commodities to hedge against inflation.

The U.S. currency yesterday rose to its strongest against the euro since May 21 after Russian Finance Minister Alexei Kudrin said the nation has full confidence in the dollar. Stock markets retreated around the world, undermining optimism that fuel demand may increase as economies move past the worst of the global recession.

“Oil fell under pressure today from a weakening equities market and a pop in the dollar,” said Mike Sander, an investment adviser at Sander Capital in Seattle. “If the stock market pulls back further and the dollar rallies back to $1.35 a euro, oil will fall back to the mid-$60 range.”

Crude oil for July delivery was at $70.34 a barrel, down 28 cents, in electronic trading on the New York Mercantile Exchange at 7:27 a.m. Singapore time. Yesterday, it dropped $1.42, or 2 percent, to settle at $70.62 a barrel. Oil reached $73.23 on June 11, the highest in seven months.

U.S. stocks extended a global slide yesterday, dragging the Standard & Poor’s 500 Index down from a seven-month high. The S&P 500, which had climbed 40 percent from a 12-year low March 9, decreased 2.4 percent to 923.72. The Dow Jones Industrial Average tumbled 187.13, or 2.1 percent, to 8,612.13.

Europe’s Dow Jones Stoxx 600 Index slumped 2.5 percent, and Japan’s Nikkei 225 Stock Average fell 1 percent.

U.S. Inventories

U.S. crude oil inventories probably fell in the week ended June 12, as refiners ramped up production and boosted stockpiles of gasoline and heating oil, a Bloomberg News survey showed.

Crude-oil supplies probably fell 2 million barrels last week from 361.6 million barrels the previous week, according to the median of five estimates by analysts before an Energy Department report tomorrow. All five forecast a drop.

Gasoline supplies probably rose 550,000 barrels in the week ended June 12 from 201.6 million the previous week. All of those surveyed said supplies climbed. Stockpiles during the same week last year fell 1.2 million barrels amid the peak motor fuel demand season in the U.S.

Brent crude for August delivery was untraded so far today. The contract lost $1.56, or 2.2 percent, yesterday to $70.24 a barrel on London’s ICE Futures Europe exchange. The July future expired yesterday at $69.44 a barrel.