Crude Oil Trades Near a Three-Day Low After Dollar Strengthens

July 13 (Bloomberg) -- Crude oil traded near a three-day low in New York after the dollar strengthened against the euro, curbing the appeal of commodities as an alternative investment.

Oil fell 1.5 percent yesterday as the dollar advanced amid speculation that tests to demonstrate the resilience of Europe’s banking system will fail to assure investors that the region is recovering from its sovereign-debt crisis.

“The wind has come out of the market’s sails,” said Christopher Bellew, senior broker at Bache Commodities Ltd. “Last week we got to the top of the recent trading range but failed to break through it, so without a boost from the equity market, oil is likely to sag a bit more.”

Crude for August delivery traded at $75.07 a barrel, up 12 cents, in electronic trading on the New York Mercantile Exchange at 8:31 a.m. Sydney time. Yesterday, the contract fell $1.14 to $74.95, the lowest close since July 7. Prices have declined 5.4 percent this year.

The dollar traded at $1.2591 per euro at 8:33 a.m. Sydney time from $1.2596 per euro in New York yesterday, when it strengthened to $1.2551.

U.S. crude oil inventories probably fell 1.35 million barrels in the seven days ended July 9, according to the median estimate of 10 analysts surveyed by Bloomberg News before a government report tomorrow.

Brent crude for August settlement dropped $1.05, or 1.4 percent, to settle at $74.37 a barrel on the London-based ICE Futures Europe exchange yesterday.