By Ann Koh and Ben Sharples March 9 (Bloomberg) -- Oil declined for the first day in three as analysts forecast an increase in U.S. crude supplies, signaling fuel demand from the world’s biggest energy consumer may be slow to recover. Oil dropped from an eight-week high as the dollar recovered yesterday’s losses against the euro, limiting investment demand for commodities as a hedge against inflation. U.S. crude inventories rose 2 million barrels last week, according to a Bloomberg News survey of analysts before an Energy Department report tomorrow. Gasoline stockpiles probably increased 150,000 barrels from 231.9 million the previous week. “The market is in oversupply for crude and products,” said Ken Hasegawa, a commodity derivatives sales manager at broker Newedge in Tokyo. “It will take more time to see market recovery.” Crude oil for April delivery dropped as much as 45 cents, or 0.6 percent, to $81.42 a barrel in electronic trading on the New York Mercantile Exchange. It was at $81.45 at 1:58 p.m. Singapore time. Yesterday, the contract rose 37 cents to $81.87, the highest settlement since Jan. 11. Futures have gained 2.6 percent this year. The dollar was at $1.3617 per euro at 1:58 p.m. in Singapore, from $1.3634 yesterday in New York. The greenback has gained almost 5 percent this year against the 16-nation euro amid concern over government debt in Europe. Oil Stockpiles Commercially held U.S. crude inventories have risen for five weeks to 341.6 million barrels, the highest since August last year. That’s 5.7 percent above the five-year average level, according to the Energy Department. “Inventories continue to build,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. Oil has “broken to new highs, traded to new highs, yet the market is saying maybe we’re not ready to get through there yet,” he said. Gasoline stockpiles climbed 773,000 barrels in the week ended Feb. 26 as heavy snow across the U.S. East Coast kept drivers off the roads. For the week to March 5, six of 12 analysts surveyed anticipated an increase, five predicted a drop and one said supplies were unchanged. Distillate fuel inventories probably decreased 1 million barrels, the survey showed. Stockpiles including heating oil and diesel previously fell to 151.8 million, 18 percent above the five-year average. The department will release its Weekly Petroleum Status Report tomorrow at 10:30 a.m. in Washington. Brent crude oil for April delivery dropped as much as 48 cents, or 0.6 percent, to $79.99 a barrel on the London-based ICE Futures Europe exchange. It was at $80.04 at 1:56 p.m. Singapore time. Yesterday, the contract rose 58 cents, or 0.7 percent, to $80.47, the highest settlement since Jan. 11. To contact the reporters on this story: Ann Koh in Singapore at akoh15@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net

Source