Nov. 10 (Bloomberg) -- Crude oil dropped as Tropical Depression Ida weakened, allowing workers to return to offshore platforms in the Gulf of Mexico, and as the dollar climbed.

Oil fell 0.5 percent after Ida blew ashore on the U.S. mainland today and deflated. Chevron Corp. said its Mississippi refinery was unaffected and Murphy Oil Corp. plans to resume output at an offshore platform today. The greenback’s gain curbed the appeal of commodities to investors.

“I doubt there was any severe damage caused by Ida,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “There will probably be some impact on next week’s inventory data, but that’s it.”

Crude oil for December delivery fell 38 cents to settle at $79.05 a barrel on the New York Mercantile Exchange. Prices have increased 77 percent this year.

Prices were down from the settlement after the American Petroleum Institute reported at 4:30 p.m. that U.S. crude-oil stockpiles increased 1.22 million barrels to 337.5 million. December oil dropped 75 cents, or 0.9 percent, to $78.68 a barrel in electronic trading at 4:31 p.m.

Ida made landfall this morning in Alabama. The storm’s sustained winds dropped to 35 miles (56 kilometers) per hour from 45 mph earlier, the National Hurricane Center reported earlier today.

Murphy plans to restart output today at the Medusa offshore platform in the Gulf, a company spokesman said. Production at the Thunder Hawk platform will resume tomorrow.

Idled Production

Energy producers in the U.S. idled about 43 percent of oil and 28 percent of natural-gas output in the Gulf because of Ida, the Minerals Management Service said in a statement today. About 560,000 barrels of oil output and 1.9 billion cubic feet of daily gas production remain shut.

“There’s a divide in the market,” said Michael Fitzpatrick, vice president of energy with MF Global in New York. “There are those who say that demand will increase as the economy recovers and a sizable camp that doesn’t see this happening in the near term. The dollar is a barometer of the outlook for the economy.”

The dollar gained 0.1 percent to $1.498 per euro, from $1.4999 yesterday. The Standard & Poor’s 500 Index dropped 0.1 percent to 1,092.09, the first decline in seven sessions.

“We are still pinned to the financial markets,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Economic indicators are the leaders right now, so we will keep an eye on the dollar and S&P 500.”

Demand Projection

The International Energy Agency cut its long-term forecast for global oil demand today as the economic crisis reduces consumption in developed economies and environmental policies encourage alternative energy use.

Global oil demand is expected to advance 1 percent a year to 105 million barrels a day by 2030 from 85 million in 2008, the adviser to 28 nations said today in its annual World Energy Outlook. The figure is below last year’s 2030 estimate of 106 million barrels a day.

The Organization of Petroleum Exporting Countries won’t need to raise oil production levels when it meets next month in Angola because stockpiles are “very high,” the group’s head of research said.

“I don’t see that production should be increased,” Hasan Qabazard said in an interview today in Doha, Qatar. “Stocks are a worry, particularly the product stocks.”

OPEC made a record 4.2 million barrel-a-day cut in production targets last year as fuel demand tumbled.

Asked whether OPEC should increase production at that meeting, Nobuo Tanaka, the executive director of the Paris-based International Energy Agency, said “we have to watch carefully how the oil market will move.” He was interviewed in London by Bloomberg Television.

Rising Output

Non-OPEC production of crude oil and other liquids will rise 1.1 percent to 50.18 million barrels a day this year, the Energy Department said in its monthly Short-Term Energy Outlook today. Russian production surpassed 10 million barrels for the first time in the post-Soviet era, according to the report.

“The key to the rise in non-OPEC production is Russia,” said Tancred Lidderdale, a government economist in Washington who supervised the monthly outlook. “For most of the decade Russia has struggled to increase output. It now looks like the industry has solved a number of problems and is growing.”

Brent crude for December settlement fell 27 cents, or 0.3 percent, to end the session at $77.50 a barrel on the London- based ICE Futures Europe exchange.

U.S. Inventories

The Energy Department will report that U.S. inventories of crude oil rose 1 million barrels last week, according to the median of 15 estimates by analysts surveyed by Bloomberg News.

The department is scheduled to release its weekly report on Nov. 12 at 11 a.m. in Washington, a day later than usual because of the Veterans’ Day holiday tomorrow.

Oil volume in electronic trading on the Nymex was 521,492 contracts as of 2:46 p.m. in New York. Volume totaled 540,894 contracts yesterday, 2.7 percent lower than the average over the past three months. Open interest was 1.22 million contracts. The exchange has a one-business-day delay in reporting open interest and full volume data.

To contact the reporters on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

Last Updated: November 10, 2009 16:44 EST