By Grant Smith and Ann Koh Jan. 20 (Bloomberg) -- Oil fell in New York before a report forecast to show U.S. crude inventories climbed for a third week, and as a stronger dollar curbed oil’s appeal for hedging inflation. Oil pared some of yesterday’s gains on speculation China, the second-biggest oil user, may step up efforts to curb credit growth, damping energy demand. The euro fell to the lowest level in five months against the U.S. currency, making dollar-priced assets like oil appear more expensive to foreign investors. “U.S. inventories still need to come down,” said Andrey Kryuchenkov, an analyst with VTB Capital in London. “The market doesn’t have much impetus as it awaits the data, with the dollar capping gains across commodities.” Crude oil for February delivery fell as much as 97 cents, or 1.2 percent, to $78.05 a barrel on the New York Mercantile Exchange, and traded at $78.28 at 9:44 a.m. London time. February futures expire today. The more-active March contract declined as much as 96 cents, or 1.2 percent, to $78.36. Chinese regulators asked some of the nation’s banks to limit credit after banks lent a record 9.59 trillion yuan ($1.4 trillion) last year. U.S. crude inventories probably climbed for a third week through Jan. 15, according to a Bloomberg News survey before an Energy Department report tomorrow. The dollar climbed to $1.42 per euro as of 9:03 a.m. in London from $1.4288 yesterday in New York, on concern Greece’s deteriorating finances will weigh on Europe’s economic recovery. It earlier strengthened to $1.4167, the highest since Aug. 19. Stockpiles Gain The Energy Department report tomorrow will probably show that crude oil stockpiles climbed 2.5 million barrels in the week ended Jan. 15 from 331 million the prior week, according to the median of 11 analyst responses in a Bloomberg News survey. Gasoline supplies probably increased 2 million barrels, the survey showed. Futures dropped 5.7 percent last week, the first weekly decline in five, after U.S. fuel supplies rose. Oil surged to $83.95 a barrel on Jan. 11 as cold weather in the eastern U.S. bolstered consumption of heating fuels and the dollar declined against the euro. “The market appears to have fully priced in the cold snap in the U.S., suggesting any improvement in weather conditions, likely off a cold base, will trigger selling,” Mark Pervan, senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note. The Organization of Petroleum Exporting Countries raised its forecast for global oil demand this year by 20,000 barrels to 85.15 million barrels a day. Consumption will expand 820,000 barrels a day, or 1 percent, from 2009, according to the monthly report from OPEC’s Vienna-based secretariat released yesterday. Brent crude oil for March settlement declined as much as 98 cents, or 1.3 percent, to $76.65 a barrel on the London-based ICE Futures Europe exchange. It was at $76.95 at 9:46 a.m. London time. To contact the reporter on this story: Ann Koh in Singapore at akoh15@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net

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