By Mark Shenk March 24 (Bloomberg) -- Crude oil fell as the dollar surged to a 10-month high against the euro after Fitch Ratings cut Portugal’s credit grade and on forecasts that U.S. stockpiles climbed for an eighth week. Oil slipped as much as 2.1 percent after Portugal’s downgrade renewed concern that Greece’s fiscal crisis will spread to other European nations. A stronger greenback reduces the need for raw materials as an alternative investment. An Energy Department report today will show that supplies rose 1.65 million barrels last week, according to a Bloomberg News survey. “The dollar is stronger and the euro is getting whacked because of the downgrade of Portugal,” said Kyle Cooper, a managing director at energy consultant IAF Advisors in Houston. “We’re seeing investors sell commodities and buy the dollar. What happens in the currency and equity markets are the prime movers of oil right now.” Crude oil for May delivery fell $1.57, or 1.9 percent, to $80.34 a barrel at 9:05 a.m. on the New York Mercantile Exchange. Futures have increased 1.2 percent in 2010 and 49 percent from a year earlier. The U.S. currency climbed to $1.3349 per euro, up from $1.3499 yesterday. The dollar reached $1.3334 earlier, the strongest level since May 7. The industry-funded American Petroleum Institute reported yesterday that U.S. inventories of crude oil increased 7.51 million barrels to 351.5 million. The Energy Department is scheduled to release its weekly report on inventories at 10:30 a.m. in Washington. API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the department for its weekly survey. Gasoline Inventories Gasoline stockpiles dropped 1.5 million barrels, according to the median of 16 analyst responses in a Bloomberg News survey. Supplies of distillate fuel, a category that includes heating oil and diesel, probably declined 985,000 barrels. Brent crude oil for May settlement declined $1.53, or 1.9 percent, to $79.17 a barrel on the London-based ICE Futures Europe exchange. To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net

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