Nov. 6 (Bloomberg) -- Crude oil fell in New York, erasing earlier gains as concerns that fuels supplies remain high overrode signs of an economic recovery.

Crude oil for December delivery fell as much as 45 cents, or 0.6 percent, to $79.17 a barrel in electronic trading on the New York Mercantile Exchange and traded at $79.32 at 1:20 p.m. London time. Futures earlier rose as high as $80.34 a barrel.

“Demand in the U.S. is still lagging,” said Olivier Jakob, managing director of Zug, Switzerland-based Petromatrix GmbH. “It’s difficult to find fundamental justification for these prices. The big move from $65 to $80 was due to a lot of buying from very large speculators, linked to the dollar and equities.”

Futures are heading for a 3.3 percent gain this week before an October report forecast to show that the U.S. lost the fewest jobs in more than a year. Still, U.S. crude-oil stockpiles remain 7 percent above their seasonal norm even after falling twice as much as analysts predicted last week, data from the Energy Department on Nov. 4 showed.

To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net

Last Updated: November 6, 2009 08:25 EST