By Christian Schmollinger July 17 (Bloomberg) -- Crude oil fell in New York, reversing two days of gains, as the dollar rose against the euro, limiting the appeal of commodities as an investment. The dollar climbed as investors sought safer assets after two explosions at hotels in the Indonesian capital of Jakarta. Fuel demand in the U.S., the world’s largest oil user, fell the most in the first six months to an 11-year low as the global recession curbed shipping and air traffic, the American Petroleum Institute said yesterday. “When the dollar is up, then oil is down,” said Clarence Chu, a trader at options market makers Hudson Capital Energy in Singapore. “Fundamentally the market is still weak. The demand situation hasn’t improved yet.” Crude oil for August delivery fell as much as 52 cents, or 0.8 percent, to $61.50 a barrel on the New York Mercantile Exchange. It was at $61.61 a barrel at 1:05 p.m. Singapore time. It rose as much as 0.5 percent to $62.35 a barrel. Crude climbed 0.8 percent yesterday to $62.02 a barrel as U.S. equities increased, capping their longest winning streak in six weeks, after companies including Goldman Sachs Group Inc. and Johnson & Johnson beat analysts’ estimates. Crude is up 2.9 percent this week, set for its first weekly gain since June 12. Jakarta Explosions Two bombs rocked the Ritz Carlton and the JW Marriott hotels in Jakarta, killing at least nine people and injuring 41 others, Agence France-Presse reported, citing unidentified officials. The blasts, which occurred shortly before 8 a.m. local time, ripped the facade off the Ritz, blew out windows and showered the street outside the hotels with glass and debris. Investors sought safer assets after the blasts including the dollar and the yen. The Japanese currency climbed to 132.22 per euro as of 12:10 p.m. in Tokyo from 132.89 yesterday in New York. The greenback was at $1.4114 per euro from $1.4148. Deliveries of petroleum products, a measure of consumption, declined 5.8 percent to an average 18.7 million barrels a day from January through June, the API said yesterday in a report. Demand is down 9.6 percent from a record 20.75 million barrels a day in the first half of 2005. Gasoline inventories climbed 1.44 million barrels to 214.6 million, the Energy Department report showed. Supplies were forecast to increase 875,000 barrels. “We saw yet another increase in gasoline stockpiles which is obviously pretty concerning,” said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney. “There’s not too much of a bullish story out there.” Gasoline Declines Gasoline for August delivery fell 0.82 cent, or 0.5 percent, to $1.7053 a gallon on the New York Mercantile Exchange at 10:34 a.m. Singapore time. Yesterday, it increased 0.54 cent, or 0.3 percent, to end the session at $1.7135. Brent crude for September settlement fell as much as 54 cents, or 0.9 percent, to $63.21 a barrel on London’s ICE Futures Europe Exchange. It was at $63.33 a barrel at 1 p.m. Singapore time. The contract gained 23 cents, or 0.4 percent, to settle at $63.75 a barrel yesterday. The August future expired yesterday, ending the day down 34 cents, or 0.5 percent, at $62.75 a barrel. China, OPEC China, the largest energy user after the U.S., processed a record volume of crude oil in June as faster economic growth boosted fuel demand and refining profits encouraged production. Oil processing rose for a fifth month to 31.9 million metric tons last month, or about 7.76 million barrels a day, China Mainland Marketing Research Co., which compiles data for the government, said in a statement today. The country reported yesterday that its second quarter gross domestic product increased 7.9 percent. OPEC will trim shipments by 0.8 percent in the four weeks ending Aug. 1, while still failing to meet its supply quotas seven months after they were set, according to consultant Oil Movements. The Organization of Petroleum Exporting Countries will reduce exports in the four-week period to 22.55 million barrels a day from 22.74 million a day in the month ended July 4, the tanker-tracker said today. It’s the fifth consecutive monthly drop reported in Oil Movements’ weekly reports. To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net

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