By Grant Smith and Yee Kai Pin March 25 (Bloomberg) -- Oil was little changed after declining yesterday as a larger-than-forecast increase in U.S. crude stockpiles sowed doubts about a recovery in demand. Oil traded below $81 a barrel in New York after the Energy Department said crude inventories rose 7.25 million barrels to the highest since August, more than four times the increase estimated in a Bloomberg survey. Stockpiles are 6.4 percent higher than their average for this time of year, according to the department. “The fundamentals are weak,” said Gerrit Zambo, a trader at Bayerische Landesbank in Munich. “The big build in crude inventories was bearish. But the equity markets are holding their levels and the economic outlook has brightened, and that’s validating crude.” Crude oil for May delivery was at $80.78 a barrel in electronic trading on the New York Mercantile Exchange, up 17 cents, at 9:12 a.m. London time. Brent crude oil for May settlement was at $79.75 a barrel on the London-based ICE Futures Europe exchange, up 13 cents. Yesterday, oil in New York lost 1.6 percent to settle at $80.61 after Fitch Ratings cut Portugal’s credit grade, renewing concern the fiscal crisis in Greece may spread in Europe. “The U.S. looks like it’s facing a very slow and uneven recovery,” said Toby Hassall, research analyst at CWA Global Markets Pty in Sydney. “U.S. oil demand has struggled to improve after the contraction caused by the downturn.” Supply Forecast U.S. crude oil inventories were forecast to climb 1.65 million barrels, based on the median estimate from 16 analysts polled by Bloomberg News. Stockpiles increased for an eighth week to 351.3 million, 6.4 percent above the five-year average, according to the Energy Department. Crude imports jumped 12 percent to 9.4 million barrels a day, the highest level since September, the report showed. U.S. fuel demand over the past four weeks averaged 19.36 million barrels a day, up 3.6 percent from a year earlier. Gasoline stockpiles fell 2.72 million barrels to 224.6 million in the week ended March 19. A 1.5 million-barrel drop was forecast, the survey showed. Distillate fuel inventories, including heating oil and diesel, declined 2.42 million barrels to 145.7 million. A drawdown of 985,000 barrels was forecast. “This market was well supported above $80 last night but I think the upper side should be limited,” said Ken Hasegawa, a commodity derivatives sales manager at broker Newedge in Tokyo. “It’s still possible to go below $80, depending on the euro.” To contact the reporters on this story: Ben Sharples in Sydney at bsharples@bloomberg.net; Yee Kai Pin in Singapore at kyee13@bloomberg.net

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