June 15 (Bloomberg) -- Oil fell for a second day on speculation its dollar-driven rally to a seven-month high last week outpaced prospects for a recovery in fuel demand. A report today in the U.S., the world’s largest oil consumer, may show manufacturing in New York state contracted for a 14th month. OPEC members are waiting for signs of economic recovery and are unlikely to increase production when the group next meets in September, Qatar Oil Minister Abdullah bin-Hamad Al-Attiyah said yesterday. “There has been more expectations that a correction is long overdue,” said Victor Shum, a senior principal at consultants Purvin & Gertz Inc. in Singapore. “The U.S. dollar has strengthened and that has helped push the sentiment toward selling oil a bit.” Crude oil for July delivery dropped as much as 88 cents, or 1.2 percent, to $71.16 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $71.17 a barrel at 1 p.m. in Singapore. The contract fell 0.9 percent to $72.04 a barrel on June 12, its first decline in four days, after a worse-than-expected plunge in European industrial production dented confidence in the global recovery and boosted the dollar, reducing the investment appeal of commodities. Oil reached $73.23 on June 11, the highest in seven months. “Some of these commodities really have put on some pretty solid gains without really much fundamental basis,” said Toby Hassall, research analyst at Commodity Warrants Pty in Sydney. Oil “is vulnerable to some corrective action, especially if we see further strength in the dollar.” Oil Rally, Dollar New York oil futures have gained 46 percent in the past two months, as the dollar fell 5.6 percent against a basket of six major currencies. The dollar rose for a second day today, trading at $1.3984 to the euro in early Asian trading, from $1.4016 late in New York last week. Higher U.S. retail gasoline prices may start to crimp demand for the fuel even as the country enters the summer travel season. The average unleaded gasoline price has climbed to $2.663 a gallon, according to AAA, the nation’s biggest motoring club. That’s the highest since Oct. 27. Still, the price is 35 percent lower than a year ago. “Because of the crude price rally, gasoline is well above $2.50,” said Purvin & Gertz’s Shum. “Even though last year it got higher, the unemployment rate wasn’t at 9-plus percent. So the high gasoline will have some impact on U.S. demand.” The U.S. unemployment rate hit a 25-year high of 9.4 percent as of May. Brent Declines Brent crude for July delivery fell as much as 74 cents, or 1 percent, to $70.18 a barrel on London’s ICE Futures Europe exchange. The contract expires today. The more actively traded August contract declined as much as 78 cents, or 1.1 percent, to $71.02 a barrel. Militant rebels in Nigeria, Africa’s biggest oil producer and the sixth-largest in OPEC, blew up two oil wells and pipelines at the Chevron Corp.-operated Makaraba field, the Movement for the Emancipation of the Niger Delta said yesterday. OPEC pumps about 40 percent of the world’s oil. The group last week lowered its 2009 demand forecast to 83.8 million barrels a day, from 84.03 million a month earlier. Daily consumption may climb to 84.6 million barrels in the fourth quarter from 83 million now and 84.9 million in the fourth quarter of 2008, it said June 12. Hedge-fund managers and other large speculators increased their net-long position in New York crude-oil futures in the week ended June 9, according to U.S. Commodity Futures Trading Commission data. Speculative long positions, or bets prices will rise, outnumbered short positions by 47,883 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions rose 8,196 contracts, or 21 percent, from a week earlier.

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