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Oil snaps three-day rally on crude stockpiles

Oil declined for the first time in four days in New York as traders bet stockpiles in the US are rising and as the dollar strengthened, curbing investor demand for commodities.

Futures dropped as much as 1.1pc before a US Energy Department report today that may show crude inventories increased by 1 million barrels last week, according to a Bloomberg News survey of analysts.

The American Petroleum Institute said yesterday stockpiles surged 6.4 million barrels, the most since March. The dollar climbed against all except one of its 16 most-traded peers.

“Oil continues to react to dollar movements,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd in Melbourne. “With seasonal maintenance and outages at refineries, I’d expect to see some build in crude stockpiles.”

Crude for December delivery fell as much as 90 cents to $81.65 in electronic trading on the New York Mercantile Exchange. It was at $81.69 at 8:23am.

Brent crude for December settlement fell as much as 81 cents, or 1pc, to $82.85 a barrel on the ICE Futures Europe exchange in London.

The dollar advanced versus the euro and the yen after the US Conference Board said yesterday consumer confidence rebounded in October from a seven-month low.

Falling petroleum demand

The Energy Department report today at 10:30am in Washington may show US petroleum stockpiles increased by 625,000 barrels last week, according to the Bloomberg News survey. The industry-funded API yesterday said supplies of the motor fuel declined 1.8 million barrels.

US petroleum consumption dropped 1.7pc last week, the biggest weekly slide since September 10, according to MasterCard Inc.

Motorists bought an average 9.1 million barrels a day of the fuel in the week ended October 22, the second-largest payments network company said yesterday in its SpendingPulse report.

Distillate fuel inventories, including heating oil and diesel, decreased 1.5 million barrels last week, based on the Bloomberg News survey. Supplies climbed 818,000 barrels, according to yesterday’s API report.

“We need a series of draws, especially in distillates and crude, in order to see the market tightening,” said Westmore. “Given the size of distillate stocks at the moment, I’d expect refinery runs to continue being weak.”

Crude also declined as protests by French oil-industry workers against pension reforms eased. Industrial action across France forced nine of 11 refineries to shut, causing fuel shortages and disrupting exports.

A quarter of France’s refinery workers agreed to go back to work after the French Senate passed President Nicolas Sarkozy’s pension bill, paving the way for the minimum retirement age to be raised to 62 from 60. The bill goes for a final vote at the National Assembly today.