Crude Oil Trades Near Five-Week Low on Dollar, Fuel Stockpiles

July 7 (Bloomberg) -- Crude oil traded near a five-week low on a stronger dollar and concern slow fuel consumption will lead to an increase in stockpiles.

Oil was below $65 a barrel in New York as the dollar advanced against the euro, reducing the appeal of commodities. U.S. gasoline inventories probably increased 1 million barrels last week from 211.2 million, a Bloomberg News survey showed. Crude futures reached an eight-month high of $73.38 on June 30, from about $32 in December.

“There has been a bit of strength with the U.S. dollar and that seems to be weighing on a lot of commodities,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “We have investors pausing for a bit of breath in this rally and re-assessing the outlook.”

Oil for August delivery was at $64.28 a barrel, up 23 cents, at 8:32 a.m. Sydney time on the New York Mercantile Exchange. Yesterday, the contract fell $2.68, or 4 percent, to $64.05, the lowest settlement since May 27.

A rising dollar reduces the attraction of raw materials such as oil and gold to investors. The dollar was at $1.3990 per euro at 8:09 a.m. in Singapore, from $1.3984 yesterday.

U.S. Stockpiles

Ten analysts surveyed forecast a gain in U.S. gasoline inventories, one said there was a drop and one expected no change, according to the Bloomberg survey.

Crude supplies in the U.S. fell 2.9 million barrels in the week ended July 3 from 350.2 million the previous week, according to the median of 12 estimates by analysts before an Energy Department report tomorrow.

Supplies of distillate fuel, a category that includes heating oil and diesel, probably rose 1.83 million barrels from 155 million. The Energy Department is scheduled to release its weekly report on July 8 at 10:30 a.m. in Washington.

Gasoline for August delivery gained 1.13 cents, or 0.7 percent, to $1.7571 a gallon at 9:38 a.m. Sydney time in New York. Yesterday, it declined 5 cents, or 2.8 percent, to $1.7404.

Concern that the global recession will delay a recovery in fuel demand has weighed on oil prices.

Job losses in the U.S., the world’s largest energy user, were 467,000 in June, worse than forecast, and the unemployment rate rose to a quarter-century high of 9.5 percent, according to Labor Department data released on July 2.