Nov. 13 (Bloomberg) -- Crude oil advanced as the dollar dropped, buoying demand for commodities as an alternative investment to the U.S. currency.

Oil recovered after falling to its lowest in almost a month yesterday, when a U.S. government report yesterday showed rising stockpiles of crude and oil products. The dollar weakened to $1.4902 against the euro from a close of $1.4850 yesterday.

“We are seeing a bit of a rebound,” Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich, said by phone from Vienna. “The dollar is a bit weaker today.”

Oil for December delivery rose as much as 61 cents, or 0.8 percent, to $77.55 a barrel on the New York Mercantile Exchange and was at $77.48 a barrel at 9:57 a.m. London time. Futures fell as much as 3.5 percent yesterday to $76.52 and declined further to $76 earlier today, their lowest price since Oct. 15.

The Energy Department report showed crude stockpiles rose a more-than-estimated 1.76 million barrels last week to 337.7 million last week. Oil inventories are currently about 8 percent above last year’s levels. Gasoline inventories rose by 2.56 million barrels to 210.8 million, compared with a forecast decline of 350,000 barrels.

“The figures reflect tepid U.S. demand,” Paul Harris, head of natural resources risk management at the Bank of Ireland in Dublin, said today.

U.S. Indicators

The market is now awaiting economic reports including U.S. trade figures and a report on U.S. consumer confidence.

“We are looking for any evidence of any return to growth in the U.S.,” Harris said. “That will drive the dollar and the dollar is one of the key drivers for oil.”

The Reuters/University of Michigan preliminary index of U.S. consumer sentiment for this month may rise to 71 from 70.6 in October, according to the median estimate of economists surveyed by Bloomberg.

Brent crude for December settlement added as much as 76 cents, or 1 percent, to $76.78 a barrel on the London-based ICE Futures Europe exchange and traded at $76.75 a barrel at 9:59 a.m. local time.

To contact the reporters on this story: Rachel Graham in London rgraham13@bloomberg.net

Last Updated: November 13, 2009 05:31 EST