NEWYORK, Mar. 16 -- Crude oil traded below $80 a barrel in New York on concern demand in the U.S., the world's largest energy consumer, hasn't grown fast enough to justify the recent gain in prices.
Oil declined for a second day yesterday after the dollar rebounded against the euro, curbing demand for commodities as an alternative investment. The Organization of Petroleum Exporting Countries will probably maintain output at a meeting tomorrow in Vienna, according to Saudi Arabia's oil minister. An Energy Department report tomorrow may show U.S. crude stockpiles rose for a seventh week, a Bloomberg News survey showed.
"The recovery story has been priced into commodities," David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd., said in Sydney. "Some of the commodities, and oil is one, are getting up to high price levels relative to recent trading ranges and that has caused some investors to back off a bit."
Crude oil for April delivery was at $79.75 a barrel, down 5 cents, in electronic trading on the New York Mercantile Exchange at 11:38 a.m. Singapore time. The contract lost 1.8 percent yesterday to $79.80, the lowest settlement since March 2.
The dollar was little changed against the euro after rising yesterday to $1.3677 in New York. The U.S. currency strengthened as European finance ministers sparred over assistance for Greece, damping investors' appetite for higher-yielding assets.
"There seems to be a bit of lethargy about a lot of commodity markets at the moment," Moore said. "The investor drive seems to have faded a little bit."
OPEC will maintain production targets at tomorrow's meeting as it awaits further confirmation of a recovery in demand, according to a Bloomberg News survey of analysts. The 12-member group, which pumps 40 percent of the world's oil, meets for the first time this year.
Saudi Arabia, the biggest and most influential group member, said oil is in the right price range and there's no need to change output policy.
"We are extremely happy with the market, the economy is doing well, it will do better down the road, so I don't see any reason to disturb this happy situation," the kingdom's oil minister Ali Al-Naimi said late yesterday. "The price has stayed very well in the range of $70 to $80."
U.S. crude oil inventories probably increased 750,000 barrels in the week to March 12, according to the median of estimates from six analysts before tomorrow's Energy Department report. Supplies previously rose to 343 million barrels, 5.5 percent above the five-year average level.
"It's not a particularly tight market at the present and we are now past the peak of the northern winter demand," said Moore at Commonwealth Bank of Australia. "We're coming into the normally soft period for demand for crude."
The U.S. Federal Reserve will detail its outlook for interest rates today. China, the second-largest energy consumer, may take steps to cool its expansion and economists predict India will raise interest rates after inflation in both nations accelerated to a 16-month high.
China will account for almost a third of global oil-demand growth this year, according to the International Energy Agency. Countries outside the Organization for Economic Cooperation and Development will continue to lead a recovery in energy use, it said March 12.