By Yee Kai Pin Nov. 26 (Bloomberg) -- Oil fell in New York as traders sold contracts to lock in gains ahead of the U.S. Thanksgiving holiday and after the U.S. Energy Department said crude inventories held by the world’s largest energy consumer rose. Oil also pulled back after rallying 2.6 percent yesterday, the most since Nov. 16, as the dollar retraced some of its losses. Commercially held U.S. stockpiles rose to a four-week high of 337.8 million barrels in the week to Nov. 20, renewing concern over the pace of recovery in fuel demand. “We can expect some profit-taking selling after last night’s sharp gains led by gold and the euro,” said Ken Hasegawa, a commodity derivatives sales manager at Newedge in Tokyo. “It’s possible to go as low as $76.50 -- that’s the level before it started rising yesterday.” Crude oil for January delivery fell as much as 74 cents, or 1 percent, to $77.22 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $77.36 a barrel at 2:15 p.m. Singapore time. Yesterday, it rose $1.94 to $77.96 a barrel. Futures have gained 73 percent this year. Floor trading in New York will be suspended today because of Thanksgiving. The exchange will close early tomorrow, while electronic trading will continue through the holiday. “With the U.S. on holiday today, both the upper side and lower side should be limited,” Hasegawa said. “We cannot expect further gains today.” Dollar Index The Dollar Index, which tracks the greenback against the currencies of six trading partners, rose 0.06 percent to 74.312 after it reached a 15-month low yesterday. The U.S. currency yesterday fell to $1.5144 against the euro, the lowest since August 2008, amid speculation the Federal Reserve will keep interest rates low. A European Commission report tomorrow may show executive and consumer confidence rose to the highest in 14 months. A weaker dollar bolsters the investment appeal of commodities. “Oil had a bit of price support from a weaker U.S. dollar” yesterday, said Ben Westmore, an energy and minerals economist at National Australia Bank Ltd. in Melbourne. The Federal Open Market Committee called the dollar’s depreciation “orderly” in minutes of its November meeting released Nov. 24. Fuel Stockpiles U.S. gasoline inventories increased to 210.1 million barrels last week as imports rose and refiners boosted output, Energy Department data showed. Distillate fuel supplies, which include heating oil and diesel, dropped for a second week to 166.9 million barrels even as consumption stagnated. “The decline in distillate demand has narrowed a tad,” analysts at Barclays Capital, led by Paul Horsnell, said in a report after yesterday’s release of weekly Energy Department data. “It is still a bit too early to say that U.S. diesel demand has turned the corner.” Brent crude oil for January delivery on the London-based ICE Futures Europe exchange fell as much as 54 cents, or 0.7 percent, to $77.90 a barrel. The contract traded at $77.96 a barrel at 2:01 p.m. in Singapore. Yesterday, it rose 2.6 percent, the most since Nov. 16, to $78.44 a barrel. To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net

Source