Oil rose above $74 a barrel in New York for the first time since August as the slumping dollar heightened crude’s appeal as an inflation hedge. Goldman Sachs Group Inc. stood by its forecast for oil to reach $85 a barrel by the end of this year on “modest” improvements in global demand in the fourth quarter. The Organization of Petroleum Exporting Countries raised its 2010 global oil-demand growth forecast by 200,000 barrels a day. “The strength in equities and weakness of the dollar could take oil up to $80 a barrel, even though fundamentals of supply and demand don’t justify it,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. Crude oil for November delivery rose as much as $1.20, or 1.6 percent, to $74.47 a barrel in electronic trading on the New York Mercantile Exchange. That’s the highest since Aug. 25. It was at $73.99 at 2 p.m. London time. Futures have gained 66 percent this year. The dollar declined to the weakest level against the euro since before the bankruptcy of Lehman Brothers Holdings Inc., sending crude higher for a fourth day. The U.S. currency was at $1.4855 a euro at 1:39 p.m. London time. The greenback is down 10 percent against six trading partners’ currencies in Treasury Secretary Timothy Geithner’s first eight-and-a-half months, the sharpest drop for a new occupant of that office since the Reagan administration’s James Baker persuaded world leaders to boost the deutsche mark and yen by debasing the dollar in 1985. OPEC’s Optimism OPEC, responsible for about 40 percent of worldwide oil supply, predicts that total crude consumption will increase by 700,000 barrels a day to 84.93 million barrels a day next year, led by demand from emerging markets. “Chinese activity indicators remain robust,” analysts at Goldman Sachs Group Inc. led by Allison Nathan said in a report today. “We continue to forecast rising oil prices and returns later this year and into 2010.” The oversupply in U.S. distillates remained “the most severe,” Goldman Sachs said. Distillate fuel inventories, including diesel and heating oil, have climbed to 171.8 million barrels, the highest since January 1983, Energy Department data showed. Stockpiles probably declined 200,000 barrels in the week ended Oct. 2, according the median of estimates from 11 analysts in a Bloomberg survey. “A lot of refineries will close from the middle of October to November for maintenance, so typically crude stocks will build,” said Clarence Chu, a trader with options dealers Hudson Capital Energy in Singapore. “I don’t see any reason why crude oil should rally past $75, which is the upper bound for prices in the past few months.” Crude Stockpiles Commercially held crude oil stockpiles probably climbed by 1 million barrels last week, the survey showed. Seven analysts predicted an increase while four said there was a drawdown. The Energy Department is scheduled to release its Weekly Petroleum Status Report Oct. 15 at 11 a.m. in Washington, a day later than usual because of the Columbus Day holiday. Brent crude oil for November settlement gained as much as $1.47, or 2.1 percent, to $72.83 a barrel on the London-based ICE Futures Europe exchange. That’s the highest since Aug. 31. It was at $72.16 at 1:59 p.m. London time.

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