By Ann Koh and Ben Sharples Feb. 25 (Bloomberg) -- Oil fell below $80 a barrel after the dollar rose against the euro, reducing the appeal of commodities as an inflation hedge. Crude pared earlier gains as the dollar rose toward a nine- month high against the euro on speculation Greece’s credit rating will be downgraded as the country struggles to push through fiscal cuts demanded by the European Union. Oil climbed 1.5 percent yesterday as Federal Reserve Chairman Ben S. Bernanke said private-sector demand growth for goods and services will spur the economic rebound. “The dollar’s strengthened in general against the euro,” said Anthony Nunan, an assistant general manager for risk management at Mitsubishi Corp. in Tokyo. “Until the situation in Greece is clarified, we’re going to have that.” Crude oil for April delivery fell as much as 44 cents, or 0.6 percent, to $79.56 a barrel in electronic trading on the New York Mercantile Exchange. It was at $79.68 a barrel at 1:17 p.m. Singapore time. Yesterday, the contract gained $1.14 to settle at $80 a barrel. The dollar traded at $1.3468 per euro at 1:05 p.m. Singapore time, from $1.3538 yesterday. Greece may see its sovereign debt rating cut within months should it fail to meet the objectives in its fiscal deficit reduction plan, Pierre Cailleteau, managing director of sovereign risk at Moody’s Investors Service, said in an interview in Tokyo today. U.S. Fuel Demand Bernanke said a slack labor market and low inflation will allow the Federal Open Market Committee to keep its benchmark lending rate low “for an extended period.” The rate has been in a range of zero to 0.25 percent for more than a year. U.S. oil supplies gained 3.03 million barrels last week to 337.5 million, the highest since November. Crude stockpiles were forecast to increase 1.9 million barrels, in a Bloomberg News survey of analysts. Supplies of gasoline dropped 895,000 barrels. They were forecast to increase 600,000 barrels according to the survey. Distillates, including heating oil and diesel fuel, fell 591,000 barrels to 152.7 million, the department said. They were estimated to drop 1.5 million barrels in the survey. Refinery utilization jumped 1.42 percentage points to 81.2 percent, the highest level since the week ended Jan. 8. Operations were forecast to gain 0.2 percent. Brent crude for April settlement fell as much as 35 cents, or 0.5 percent, to $77.74 a barrel on the ICE Futures Europe exchange in London. It was at $77.88 a barrel at 12:51 p.m. Singapore time. Yesterday it increased 84 cents, or 1.1 percent, to $78.09 a barrel. To contact the reporters on this story: Ann Koh in Singapore at akoh15@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net

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