By Alexander Kwiatkowski June 16 (Bloomberg) -- Oil dropped from close to a one- month high in New York as a stronger dollar reduced the appeal of commodities to investors. Oil retreated as the U.S. currency rebounded against the euro, limiting crude’s appeal as an inflation hedge. The euro fell as low as $1.2273 from $1.2332 yesterday. A U.S. government report today is expected to say crude inventories declined last week, according to a Bloomberg survey. “The link between oil and other markets, like equities and the euro-dollar, is still very strong,” said Sintje Diek, an analyst at HSH Nordbank in Hamburg. “The fundamental picture is improving a bit, but nevertheless we still have very high inventories.” Crude for July delivery fell as much as 46 cents, or 0.6 percent, to $76.48 a barrel and was at $76.76 a barrel on the New York Mercantile Exchange at 11:08 a.m. London time. The contract surged $1.82 yesterday to $76.94, the highest closing price since May 6. New York crude broached a closely watched pricing point yesterday, ending above the 200-day moving average of $76.77 for the first time in a month. Oil is set to surpass this year’s highs above $87 a barrel after breaching the 200-day moving average yesterday, a “major” chart resistance level, according to Schork Group Inc. “At this point it is now hard to argue against a retest of the highs from early May,” Schork said in an instant message. Crude reached a 19-month high of $87.15 a barrel on May 3 before tumbling as much as 26 percent. Inventory Outlook Brent crude for August settlement declined 9 cents, or 0.1 percent, to $77.01 a barrel on the London-based ICE Futures Europe exchange. It climbed $1.44, or 1.9 percent, to $77.10 a barrel yesterday. The July contract expired after rising $1, or 1.3 percent, to end the session at $76.20 a barrel yesterday, the highest settlement since May 14. The Energy Department is likely to say inventories declined 1 million barrels in the week ended June 11, according to the median of 15 analyst responses in a Bloomberg News survey. U.S. gasoline inventories were probably little changed last week, the Bloomberg News analyst survey shows. Stockpiles of distillate fuel, a category that includes heating oil and diesel, are forecast to climb 1 million barrels. The department is due to release its weekly report at 10:30 a.m. in Washington. Oil’s gains yesterday were tempered after the industry- funded American Petroleum Institute reported that U.S. crude stockpiles rose 579,000 barrels to 358.7 million. Statoil Rig Orders The API report also showed a gain of 107,000 barrels at the Cushing, Oklahoma delivery point for the New York oil futures, pushing supplies to 37.5 million, according to a note by JPMorgan Chase & Co. analysts. Statoil ASA, Norway’s biggest oil and gas producer, declared force majeure to change the terms on two rig contracts in the U.S. Gulf of Mexico because of a ban introduced on deepwater drilling after the BP Plc oil spill. “The moratorium created a very challenging situation for all parties involved in Gulf of Mexico deepwater drilling,” Kjersti Tvedt Morstoel, a Statoil spokeswoman, said today by telephone. There’s “considerable cost exposure, as well as many operational, legal and other challenges facing rig operators, suppliers and contractors,” she said. Force majeure is a contractual provision under which a supplier may claim legal immunity from failing to deliver goods or services because of events outside its control. To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net

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