Crude oil declined in New York after the dollar increased and gold plunged the most in more than three years, curbing investor interest in raw materials. Futures dropped 0.3 percent as the U.S. currency rebounded against the euro, reducing the appeal of dollar-denominated commodities as an investment. Gold plunged the most since March 2008 on speculation financial markets are stabilizing. Oil rose as much as 1.4 percent earlier when the Energy Department said supplies fell 2.21 million barrels to 351.8 million last week. “The dollar finished the day a bit higher, which sent oil lower,” said Phil Flynn, vice president of research at PFGBest in Chicago. “A lot of traders are diversified, and when gold dropped they probably had to sell oil because of margin calls.” Crude oil for October delivery fell 28 cents to settle at $85.16 a barrel on the New York Mercantile Exchange. Prices are up 19 percent over the past year. Brent oil for October settlement increased 84 cents, or 0.8 percent, to end the session at $110.15 a barrel on the London- based ICE Futures Europe exchange. The European benchmark contract was at a $24.99 a barrel premium to U.S. futures, down from a record $26.21 on Aug. 19 based on closing prices. The dollar gained versus all of its 16 most-traded peers amid speculation about whether Federal Reserve Chairman Ben S. Bernanke will say this week that the Fed is willing to provide greater stimulus for the economy. He’s meeting with central bankers in Jackson Hole, Wyoming. ‘The Main Drivers’ “Economic perceptions remain the main drivers,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “All eyes will be on Jackson Hole, and whether there will be an announcement that’s good for the economy and the oil market.” The U.S. currency rose 0.1 percent to $1.4425 against the euro from $1.4442 yesterday. Gold for December delivery tumbled $104, or 5.6 percent, to settle at $1,757.30 an ounce on the Comex in New York. Prices surpassed $1,900 for the first time ever this week. The S&P GSCI Index of 24 raw materials slipped 0.3 percent to 650.41. Eighteen commodities dropped. “Oil has stayed well propped up,” said Todd Horwitz, chief strategist at Adam Mesh Trading Group in New York. “The gold bubble appears to have popped, and it’s probably only a matter of time before the same thing happens to oil.” Refineries operated at 90.3 percent of capacity, equaling the 2011 high set July 15, the Energy Department report showed. Operating rates were forecast to be unchanged at 89.1 percent, according to the median of 13 analyst responses in a Bloomberg news survey. Refinery Profits Refinery margins as expressed by the so-called crack spread climbed to a record $37.957 a barrel Aug. 19. The profit to process three barrels of oil into two of gasoline and one of heating oil, based on New York futures prices, climbed to $33.57 today and has averaged $19.87 in the past year. Gasoline inventories rose 1.36 million barrels to 211.4 million in the week ended Aug. 19, the report showed. Supplies of distillate fuel, a category that includes heating oil and diesel, increased 1.73 million barrels to 155.7 million, highest level since February. Distillate fuel output rose 2.9 percent to 4.68 million barrels a day, the highest level since July 2008. Consumption of distillate fuel climbed 8.4 percent to 3.85 million barrels a day in the week ended Aug. 19, the department said. Gasoline demand dropped 2 percent to 9.01 million barrels a day, the report showed. Libyan Conflict In Libya, rebels seized control of Muammar Qaddafi’s compound in Tripoli yesterday after battling loyalist forces for control of the capital for a third day. Today, fighters are closing in on the loyalist-held town of Sirte, Qaddafi’s hometown and one of the last strongholds of his forces, said the rebel Military Council in Misrata. Oil production may take a year to reach the previous total of 1.5 million barrels a day, Ahmed Jehani, chairman of the rebels’ stabilization team, told reporters yesterday in Dubai. The country’s production fell to 100,000 barrels a day last month, according to a Bloomberg News survey. Federal Reserve will act to stimulate the economy. Oil volume in electronic trading on the Nymex was 478,976 contracts as of 3:26 p.m. in New York. Volume totaled 572,256 contracts yesterday, 16 percent below the average of the past three months. Open interest was 1.47 million contracts. To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.

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