By Grant Smith Jan. 21 (Bloomberg) -- Oil was little changed in New York before a report forecast to show that U.S. crude inventories increased for a third week. Crude rose as much as 0.6 percent earlier today after China said its gross domestic product increased 10.7 percent in the fourth quarter. Oil’s gain was offset as the dollar strengthened against the euro, dulling its appeal for hedging against inflation. U.S. supplies of distillate fuels such as heating oil are 18 percent above normal, the Energy Department said. “In times of dollar strengthening it’s always difficult for commodities to maintain their price,” said Tobias Merath, head of commodities research at Credit Suisse Group AG in Zurich. “With distillate inventories still so high, it’s unlikely refinery utilization will go up, and oil consumption is likely to remain somewhat subdued.” Crude oil for March delivery traded at $77.66 a barrel as of 10:22 a.m. in electronic trading on the New York Mercantile Exchange. It traded as high as $77.32 earlier in the day. Yesterday, the contract declined $1.58, or 2 percent, to end the session at $77.74, the lowest close since Dec. 23. “Looking at the fundamentals, we’re not seeing substantial improvement in the manufacturing and industrial production sectors in the advanced economies, especially the U.S.,” said Toby Hassall, a research analyst at CWA Global Markets Pty in Sydney. “Until we see greater evidence of that, oil will struggle to make much upward progress.” Stronger Dollar The U.S. dollar strengthened as much as 0.4 percent to $1.4054 versus the euro. An Energy Department report today will probably show that crude oil supplies climbed 2.4 million barrels in the week ended Jan. 15 from 331 million the prior week, according to the median of 17 analyst responses in a Bloomberg News survey. The American Petroleum Institute reported yesterday that crude-oil supplies declined 1.8 million barrels to 328.3 million last week. China’s gross domestic product rose more than the median forecast of 10.5 percent in a Bloomberg News survey, a statistics bureau report showed in Beijing today. For the full year, GDP gained 8.7 percent, beating Premier Wen Jiabao’s 8 percent target. Brent crude oil for March settlement dropped as much as 56 cents, or 0.7 percent, to $75.76 a barrel on the London-based ICE Futures Europe exchange. It was at $76.10 a barrel at 10:15 a.m. London time. It declined $1.31, or 1.7 percent, to end the session at $76.32 a barrel yesterday. To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

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