Oil declined from a four-month high as the International Monetary Fund cut its global growth forecasts and on speculation that U.S. inventories increased.

Prices dropped for the first time in five days as the dollar strengthened against the euro after the IMF projected a second year of contraction in the euro region.

The world economy will expand 3.5 percent this year, less than the 3.6 percent forecast in October, the Washington-based IMF said today in an update of its World Economic Outlook report. It expects the 17-country euro area to shrink 0.2 percent in 2013, instead of growing 0.2 percent as forecast in October, as Spain leads the contraction and Germany slows.

Stockpiles probably increased 2 million barrels last week after production reached a 20-year high, a Bloomberg survey showed.

West Texas Intermediate crude for March delivery fell to $96.20 a barrel on the New York Mercantile Exchange.

Brent for March settlement climbed 20 cents to $112.62 a barrel on the London-based ICE Futures Europe exchange.