Oct. 7 (Bloomberg) -- Crude oil retreated after a U.S. Energy Department report showed that inventories of gasoline and distillate fuel, a category that includes heating oil and diesel, increased as refineries bolstered operating rates. Gasoline supplies rose 2.94 million barrels to 214.4 million last week, almost three times the amount forecast by analysts in a Bloomberg News survey. Distillate stockpiles climbed 679,000 barrels to 171.8 million, the highest since January 1983. Oil also fell as the rising dollar reduced the appeal of energy to investors looking for an inflation hedge. “The big gasoline number is the focus at the moment,” said Mike Fitzpatrick, vice president of energy with MF Global in New York. “We may end the day higher anyway because there is great demand from investors, which is more important than the supply and demand fundamentals.” Crude oil for November delivery fell 15 cents to $70.73 a barrel at 10:55 a.m. on the New York Mercantile Exchange. Oil traded at $71.42 before the release of the report at 10:30 a.m. in Washington. Gasoline inventories were forecast to climb 1 million barrels, according to the median response from fifteen analysts surveyed by Bloomberg News. Supplies of distillate fuel were estimated to have declined 400,000 barrels. “Until oil breaks out of this range the supply numbers don’t mean a lot,” said Sean Brodrick, natural resource analyst with Weiss Research in Jupiter, Florida. “We are following the inventory report right now but it’s important to keep an eye on what the dollar does.” Weak Fundamentals “Fundamentals are still weak,” BNP Paribas SA senior oil analyst Harry Tchilinguirian said in an interview with Bloomberg radio. “This year is going to end with a contraction in global demand. There have been positive supply surprises in places outside OPEC like Russia, and OPEC’s own compliance has slipped.” Nations outside of the Organization of Petroleum Exporting Countries will increase crude oil and other liquids production by 0.7 percent to 50.04 million barrels a day this year, as increased output in Brazil, the U.S., Azerbaijan, Kazakhstan and Canada offsets declines in Mexico and the North Sea, according the Energy Department’s monthly Short-Term Energy Outlook released yesterday. Europe’s economy contracted more than estimated in the second quarter as consumer spending, investment and exports were weaker than earlier reported. Members of the European Union were responsible for 18 percent of global oil consumption in 2008, according to BP Plc, which publishes its BP Annual Statistical Review of World Energy each June. Gross domestic product in the 16-nation euro region fell 0.2 percent from the first quarter, when it dropped 2.5 percent, the European Union’s statistics office in Luxembourg said today. The decline was sharper than the 0.1 percent decrease estimated on Sept. 2. To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

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