By Grant Smith April 12 (Bloomberg) -- Oil declined for a fourth straight day in New York on speculation that demand has not sufficiently recovered to support prices around $85 a barrel. Futures gave up earlier gains as the dollar pared losses versus the euro, curbing the appeal of commodities for hedging against inflation. Hedge fund managers and other speculators increased their positions last week, regulators’ data show. Still, U.S. crude inventories remain 7 percent above their seasonal norm, according to the Energy Department. “After renewed speculative interest on positive macro sentiment pushed the market to 18-month highs last week, oil is pausing for breath,” said Andrey Kryuchenkov, analyst with VTB Capital in London. “Fundamentals are recovering only gradually and supplies are plentiful.” Crude oil for May delivery fell as much as 56 cents, or 0.7 percent, to $84.36 a barrel in electronic trading on the New York Mercantile Exchange, and was at $84.53 at 12:46 p.m. London time. Brent crude for May settlement was down 4 cents at $84.79 on the London-based ICE Futures Europe exchange. Speculative long positions, or bets prices will rise, outnumbered short positions by 128,138 contracts on the New York Mercantile Exchange, the Washington-based Commodity Futures Trading Commission said in a weekly report on April 9. Net-long positions rose by 10,984 contracts, or 9 percent, last week. China, the world’s second-largest energy consumer, imported 21.1 million metric tons of crude oil last month, or about 5 million barrels a day, based on preliminary data from the General Administration of Customs. That’s 29 percent higher than a year earlier. Dollar Correlation “China is possibly the most bullish element of the oil story right now,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “Today we’re probably also witnessing support for prices as hedge funds enter the market to trade the dollar correlation.” Oil gained 0.9 percent earlier as the dollar slipped to its lowest rate against the euro in more than three weeks after European governments offered debt-burdened Greece a rescue package. A weaker U.S. currency heightens the appeal of dollar- priced assets for hedging inflation. The dollar was at $1.3585 against the euro at 12:36 p.m. in London, after reaching $1.3692, the weakest rate against the 16- nation currency since March 18. Euro-region finance ministers yesterday pledged as much as 30 billion euros to Greece in three-year loans in 2010 at around 5 percent, after the country’s borrowing costs climbed to an 11- year high. The International Monetary Fund will provide another 15 billion euros.

Source