Crude oil fell for the first day in five after China, the world’s fastest-growing energy-consuming country, sought to cool its economic expansion. Oil dropped below $75 a barrel as the People’s Bank of China ordered banks to set aside more deposits as reserves for the second time in a month, boosting the dollar. An Energy Department report today showed a bigger-than-forecast increase in inventories.

“All of the markets still need every bit of stimulus the central banks can provide,” said John Kilduff, a partner at Round Earth Capital, a New York-based hedge fund that focuses on food and energy commodities. “This move augurs for diminished demand and lower prices.”

Crude oil for March delivery fell $1.15, or 1.5 percent, to settle at $74.13 a barrel on the New York Mercantile Exchange. The oil price showed little reaction to the release of the supply report. Futures have dropped 6.6 percent this year. Oil increased for the first week in five, adding 4.1 percent.

China’s central bank said today it will raise banks’ reserve requirement ratio by 50 basis points. China’s policy makers aim to avert asset bubbles and restrain inflation after flooding the economy with money last year to drive a recovery from the first global recession since World War II.

“This means it’s more difficult for the Chinese banks to lend, and China has been the bright spot in an otherwise unspectacular global economic recovery,” said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut.

Supplies Increase

Gasoline supplies increased 2.32 million barrels, or 1 percent, to 230.4 million barrels, the highest level since March 14, 2008.

“We had a very big build in gasoline, but I can’t get too excited about that given the lack of driving because of the weather,” said Stephen Schork, president of Schork Group Inc., an energy-trading consultant in Villanova, Pennsylvania. “I would expect more big builds in gasoline over the next few weeks. I think this is a weather play.”

The inventory report was delayed for two days because of back-to-back blizzards which shut the government in Washington for the first four days of this week.

Distillate stockpiles, which include heating oil and diesel fuel, lost 356,000 barrels to 156.2 million, less than the 1.55 million-barrel drop that was forecast.

Dollar Strengthens

The dollar strengthened 0.6 percent against the euro to $1.3616 at 2:59 p.m. in New York from $1.3693 yesterday. Earlier, it touched $1.3532, the highest price since May on an intraday basis. A stronger dollar curbs demand for commodities as an alternative investment.

The U.S. currency also gained as a report showed Europe’s recovery almost stalled amid concern European Union efforts to avoid a default by Greece will harm the European economy.

The euro region’s gross domestic product grew less than forecast in the fourth quarter of last year, according to the report by the EU’s statistics office in Luxembourg. It rose 0.1 percent from the third quarter, when it gained 0.4 percent.

“It’s the rise in the dollar that is affecting the price of crude,” said Sean Brodrick, a natural resource analyst with Weiss Research in Jupiter, Florida. “Crude oil is acting more and more like an international currency everyone uses.”

Stagnant Economy

Skepticism about European Union efforts to avoid a default by Greece and the region’s stagnant economy increased the appeal of the dollar. The EU accounted for 18 percent of global oil demand in 2008, according to BP Plc, which publishes its BP Statistical Review of World Energy each June.

Sales at U.S. retailers climbed in January for the third time in four months, signaling the consumer spending recovery that began in late 2009 continues into the new year.

The 0.5 percent increase was larger than forecast and followed a 0.1 percent drop the prior month that was smaller than previously estimated, Commerce Department figures showed today in Washington. Purchases excluding autos rose 0.6 percent.

“Retail sales were stronger than expected,” Beutel said. “If it weren’t for the China news, they would probably have taken us higher.”

Consumer Confidence

Confidence among U.S. consumers unexpectedly fell in February from a two-year high, signaling Americans may not be convinced the job market is turning around. The Reuters/University of Michigan preliminary consumer sentiment index dropped to 73.7 from January’s 74.4. The measure averaged 88.9 during the economic expansion that ended in December 2007.

Brent crude oil for April delivery fell $1.22, or 1.6 percent, to $72.90 a barrel on the London-based ICE Futures Europe exchange. The March contract expired yesterday.

Oil volume in electronic trading on the Nymex was 568,791 contracts as of 2:55 p.m. in New York. Volume totaled 904,485 contracts yesterday, 53 percent above the average of the past three months. Open interest was 1.33 million contracts.