July 17 (Bloomberg) -- Crude oil fell in New York for the first time in three days as the dollar rose against the euro, limiting the appeal of commodities as an investment.

The dollar climbed as investors sought safer assets amid speculation that CIT Group Inc. will file for bankruptcy, and after two explosions hit 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.

“Oil is on shaky ground,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “Fundamentals are bearish in the near term, with demand in the product market depressed. It’s going to take dollar weakness and better macro data to restart the uptrend.”

Crude oil for August delivery fell as much as 98 cents, or 1.6 percent, to $61.04 a barrel on the New York Mercantile Exchange. It was at $61.50 a barrel at 1:31 p.m. London time.

Crude is up 3.1 percent this week, set for its first weekly gain since June 12.

Bombs tore through the Ritz Carlton and JW Marriott hotels in Jakarta, killing at least nine people and injuring 42 others in Indonesia’s first terrorist attack since 2005.

Investors sought safer assets after the blasts including the dollar and the yen. The U.S. currency gained to $1.4064 per euro from $1.4148.

Product Deliveries Fall

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.”

Brent crude for September settlement fell as much as 94 cents, or 1.5 percent, to $62.81 a barrel on London’s ICE Futures Europe Exchange. It was at $63.13 a barrel at 1:31 p.m. London time.

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: Grant Smith in London at gsmith52@bloomberg.net.

Last Updated: July 17, 2009 08:33 EDT