By Ann Koh and Ben Sharples Oct. 21 (Bloomberg) -- Crude oil was little changed in New York as the dollar strengthened against the euro and an industry report showed the largest increase in U.S. crude stockpiles in eight weeks. Oil slipped below $79 a barrel after U.S. equities declined and the dollar rose from a 14-month low against the euro, damping the appeal of commodities as a hedge against inflation. Crude inventories in the U.S., the world’s biggest energy consumer, increased 3.85 million barrels last week, the industry-funded American Petroleum Institute reported yesterday. “If you look at fundamentals right now, there is still a considerable cushion of inventories,” Tobias Merath, head of commodity research at Credit Suisse Group AG in Zurich, said in a Bloomberg Television interview. “There is a bit of spare capacity and there is a bit of supply backup.” Crude oil for December delivery fell as much as 66 cents, or 0.8 percent, to $78.46 a barrel in electronic trading on the New York Mercantile Exchange. It was at $78.88 a barrel at 3:09 p.m. Singapore time. The November contract expired yesterday at $79.09 a barrel, down 52 cents. Futures have gained 77 percent this year. Asian stocks declined after a pullback on Wall Street yesterday as a report showed U.S. housing starts rose less than economists’ estimates. The MSCI Asia Pacific Index lost 0.3 percent to 120.87 as of 2:24 p.m. Tokyo time. Yesterday, the Standard & Poor’s 500 Index slipped 0.6 percent in New York and the Dow Jones Industrial Average decreased 0.5 percent. “The current market is overbought and some weaker data is coming out, so it’s kind of a trigger,” said Tetsu Emori, a commodity fund manager at Astmax Co. in Tokyo. “We’ve hit the bottom of the recession, probably crawling, but we haven’t found the way out from the bottom.” ‘Dampening Influence’ The dollar gained for a second day against the euro, climbing to $1.4930 per euro at 1:58 p.m. in Tokyo from $1.4945 yesterday in New York. “The U.S. dollar strengthening has helped pull the oil price off its highs,” said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. “The API data showed quite a decent build in crude inventories. That’s probably also a dampening influence on the oil price.” The Energy Department’s weekly report, due 10:30 a.m. in Washington, may show U.S. crude oil inventories rose a second week. Stockpiles increased 1.5 million barrels in the week to Oct. 16, according to the median of 15 estimates from analysts surveyed by Bloomberg News. Stockpiles of gasoline and distillate fuel, a category that includes heating oil and diesel, probably declined a second week, the survey showed. The API yesterday reported gasoline inventories declined 558,000 barrels to 209.8 million, while distillate supplies dropped 998,000 barrels to 167 million. Housing Starts Builders in the U.S. broke ground in September on fewer houses than anticipated. Housing starts rose 0.5 percent in September to an annual rate of 590,000, from a 587,000 pace in August that was lower than previously estimated, according to the Commerce Department. Economists in a Bloomberg News survey forecast a rate of 610,000. “The price is far away from fundamental values, it is quite difficult for me to understand why the oil price is staying at $70, even $60,” Emori said. Brent crude oil for December settlement declined as much as 61 cents, or 0.8 percent, to $76.63 a barrel on the London-based ICE Futures Europe exchange. The contract traded at $77.01 a barrel at 3:12 p.m. Singapore time.

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