By Ben Sharples and Yee Kai Pin Feb. 19 (Bloomberg) -- Crude oil fell for the first day in four after the Federal Reserve raised its discount rate, pushing the dollar higher and damping investor demand for commodities. Oil pared yesterday’s 2.2 percent rally as the U.S. currency traded at a nine-month high against the euro after the Fed increased its rate charged to banks for direct loans for the first time in more than three years. Energy Information Administration data also showed U.S. crude inventories climbed 3.09 million barrels last week, beating a forecast for a 1.73- million increase in a Bloomberg News survey of analysts. “The news from the Fed seems to have knocked the oil price off its peak,” said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. “My reading of the EIA report was that it was a bit of a mixed bag and not particularly supportive of the oil price.” Crude oil for March delivery fell as much as $1.16, or 1.5 percent, to $77.90 a barrel in electronic trading on the New York Mercantile Exchange. It was at $77.95 at 2:49 p.m. Singapore time. Yesterday, the contract rose $1.73 to $79.06, the highest settlement price since Jan. 14. Futures are set for a 5.1 percent gain this week. The dollar advanced for a third day against the 16-nation euro after the Fed raised the discount rate by a quarter point to 0.75 percent. The U.S. currency was at $1.3463 per euro at 2:50 p.m. in Singapore, from $1.3527 yesterday in New York. A stronger dollar damps investor demand for commodities. “I don’t think that the news from the Fed was particularly well anticipated by the market,” Moore said. “It certainly has brought the oil price back from its high levels.” Price Survey Oil may fall next week on rising U.S. inventories and speculation demand will decline next month, a Bloomberg News survey showed. Twenty-three of 45 analysts and traders polled, or 51 percent, said prices will decline through Feb. 26. Fourteen respondents, or 31 percent, forecast a gain and eight said oil will be little changed. Last week, 50 percent of respondents predicted there would be an increase in futures. U.S. crude inventories climbed to 334.5 million barrels in the week ended Feb. 12, the most in 10 weeks, according to yesterday’s report from the EIA, the statistical unit of the Energy Department. Total fuel consumption over a four-week period rose 0.2 percent from a year earlier to 19 million barrels a day. Gasoline stockpiles increased 1.62 million barrels to 232.1 million, the report showed. That’s the highest since March 2008, even as imports dropped and refineries produced less. “U.S. oil demand is still weak,” said Commonwealth Bank of Australia’s Moore. “Oil inventories are still high.” Leading Indicators Oil reached a five-week high yesterday as the New York- based Conference Board’s measure of the economic outlook for three to six months increased for a 10th month. The series of gains in the leading indicators index is the longest since 2004. Companies stepped up production and asked employees to work longer hours to meet increased demand, which may help spur hiring in coming months. A separate report showed manufacturing in the Philadelphia area expanded in February for a sixth month. The Federal Reserve Bank of Philadelphia’s general economic index rose to 17.6 from a January reading of 15.2. Brent crude for April delivery fell as much as $1.08, or 1.4 percent, to $76.70 a barrel on the London-based ICE Futures Europe exchange. It was at $76.72 at 2:49 p.m. Singapore time. Yesterday, the contract rose $1.51, or 2 percent, to $77.78, the highest settlement since Jan. 14. To contact the reporters on this story: Ben Sharples in Canberra at bsharples@bloomberg.net; Yee Kai Pin in Singapore at kyee13@bloomberg.net

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