By Grant Smith and Christian Schmollinger March 4 (Bloomberg) -- Crude fell for the first time in three days as the dollar strengthened and a report showed U.S. oil inventories swelled to their highest since August. U.S. crude stockpiles last week climbed 4.03 million barrels, the Energy Department said yesterday, more than double the gain forecast by analysts. The euro today weakened from a two-week high against the greenback as German Chancellor Angela Merkel said a meeting tomorrow with her Greek counterpart won’t be “about aid commitments.” “As crude and product stocks are still high we shouldn’t see prices go too much above $80” a barrel, said Thina Saltvedt, a commodities analyst at Nordea Bank AB in Oslo. “Risk appetite has been falling. There’s too much unsettled business in Europe, and unemployment’s still high in the U.S.” Crude for April delivery declined as much as 76 cents, or 0.9 percent, to $80.11 a barrel in electronic trading on the New York Mercantile Exchange. It was at $80.54 a barrel at 9:13 a.m. London time. Brent crude for April was at $78.92 on the London- based ICE Futures Europe. Singapore’s Navy has “received indication” that a terrorist group is planning attacks on oil tankers in the Malacca Strait, the Singapore Shipping Association said in an advisory today. Malacca Strait The Malacca Strait is the shortest sea route between the Persian Gulf and North Asian markets with an estimated 15 million barrels a day of oil carried through the channel in 2006, according to the U.S. Energy Department. About 33 percent of global seaborne crude oil moves through the 600-mile (965- kilometer) channel, making it almost six times busier than the Suez Canal. The dollar traded at $1.3654 per euro at 9:46 a.m. London time, from $1.3697 yesterday. Oil climbed to a seven-week high yesterday as service industries in the U.S. expanded more than anticipated in February, raising expectations of an increase in fuel demand on stronger economic growth. The contract increased $1.19, or 1.5 percent, to $80.87, the highest settlement since Jan. 11. An increase in oil supplies on the U.S. West Coast was responsible for much of the nationwide gain, the report showed. Stockpiles there climbed 2.31 million barrels to 51.2 million. The region’s distribution system is isolated from the rest of the country. “The headline increase is blunted a little as 2.3 million barrels of it occurred on the logistical separate West Coast,” said Barclays Capital analysts in a research note yesterday. --Editors: Rob Verdonck, Randall Hackley To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net. Grant Smith in London at gsmith52@bloomberg.net To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

Source