By Mark Shenk Sept. 22 (Bloomberg) -- Crude oil rose for the first time in four days as the dollar declined, bolstering the appeal of commodities as a hedge against inflation. Oil climbed as much as 2.9 percent as the U.S. currency slipped to $1.4821 per euro, its weakest level since Sept. 23, 2008. Net crude oil imports by China, Asia’s biggest energy- consuming country, increased 18 percent to 17.92 million metric tons in August, the second-highest level on record. “More than anything else, we are seeing a reaction to the incredible weakness of the dollar,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “Yesterday, the dollar strengthened and oil fell more than $2. Now the dollar’s plunged to the lowest level against the euro in a year and look what’s happened.” Crude oil for October delivery climbed $1.71, or 2.5 percent, to $71.42 a barrel at 11:23 a.m. on the New York Mercantile Exchange. Yesterday, prices declined $2.33, or 3.2 percent. The October contract expires today. The more actively traded November futures rose $1.76, or 2.5 percent, to $71.69. Prices have gained 60 percent this year on speculation global fuel demand will recover as economies emerge from the recession and a weakening dollar encourages investors to buy dollar-priced assets. Fed Meeting The U.S. Federal Reserve will keep its target rate for overnight bank loans at a record low of between zero and 0.25 percent following its two-day policy meeting starting today, according to all 93 economists a Bloomberg survey. Group of 20 leaders are meeting in Pittsburgh on Sept. 24-25. “The G-20 and Fed meetings will potentially have a major impact on oil prices because of what they may mean for the dollar,” said Phil Flynn, vice president of research at PFGBest, a Chicago-based brokerage. China’s net crude oil imports in August were second only to the record 19.2 million tons in July, according to data released by the Beijing-based Customs General Administration. “The Chinese are importing more oil than they need,” Flynn said. “Some is being purchased to build stockpiles and to meet future needs. They are also purchasing it as a hedge against the dollar.” The Asian Development Bank said economic growth in the region, excluding Japan, will climb 3.9 percent this year, better than its March estimate of 3.4 percent, as China, India and Indonesia expand. China’s economy will increase 8.2 percent in 2009, up from a previous estimate of 7 percent, the Manila- based institution said today. “The fundamentals, if anything, are still pretty weak and I don’t see a major turnaround,” said Guy Caruso, who was administrator of the U.S. government’s Energy Information Administration from 2002 until September 2008. “There are expectations that economic growth is returning, but at the same time production capacity has grown.” U.S. Stockpiles The U.S. Energy Department may say crude oil inventories declined for a fourth week, according to analysts surveyed by Bloomberg News. Stockpiles fell 1.4 million barrels in the week ended Sept. 18, from 332.8 million, according to the median of 17 forecasts. Supplies of gasoline and distillate fuel, a category that includes heating oil and diesel, probably increased last week, according to the survey. Refineries probably operated at 85.9 percent of capacity, down 1 percentage point from the prior week, based on the median of survey responses. U.S. refineries usually idle units for maintenance in September and October as summer demand for gasoline wanes and before heating oil use rises in the winter. Inventory Reports The Energy Department is scheduled to release its Weekly Petroleum Status Report in Washington tomorrow. The industry- funded American Petroleum Institute will put out its own data later today. “There’s at least 4 to 5 million barrels a day of excess production capacity as we go into the winter season, which would usually mean pressure on prices,” said Caruso, now a senior energy and security adviser at the Center for Strategic and International Studies in Washington. “It appears the financial markets are prompting people to look at crude oil, and we may stay in a $60 to $80 range for the foreseeable future.” Saudi Arabian Oil Co., the world’s biggest state oil company, sees little chance of pumping crude from idle fields next year because a recovery in world demand has yet to begin, its chief executive officer said. The desert kingdom has idled about 4 million barrels a day, or one-third of its crude-oil production capacity, according to the oil ministry. “We’re prepared for the long haul,” Saudi Aramco CEO Khalid al-Falih said in an interview yesterday in Jeddah, on the Red Sea coast of Saudi Arabia. “We have the excess capacity in case it’s needed, but we also have the ability to sustain ourselves with production levels similar to what we see today at prices similar to what we have seen so far.” Brent crude oil for November settlement rose $1.67, or 2.4 percent, to $70.36 a barrel on the London-based ICE Futures Europe exchange.

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