NYMEX crude sharply lower as dollar extends gains

NEW YORK, April 1 (Reuters) - U.S. crude oil futures were stuck in negative territory Tuesday morning, dropping for a third session in a row, as the dollar extended gains.

The dollar's strength already pulled prices down sharply earlier as traders sold oil for better gains in the currency market.

On the New York Mercantile Exchange at 10:45 a.m. EDT (1445 GMT), crude for May delivery CLK8 was down $1.34 or 1.32 percent at $100.24 and trading $99.55 to $101.80. The day's low was the cheapest since March 25, when prices fell to $99.13.

A trade below $98.65 on NYMEX May crude would confirm that a downtrend is in place, said Veronique Lashinski, technical analyst at Newedge USA in Chicago.

"Even though the dollar gained further with the U.S. manufacturing data, there are still some bulls still hanging around crude futures, but as the dollar continues to rally there is difficulty in maintaining that position," said Phil Flynn, analyst at Alaron Trading in Chicago.

In London, May Brent crude LCOK8 was down 94 cents or 0.94 percent at $99.36 a barrel, trading from $98.11 to $100.87.

NYMEX new front-month May RBOB RBK8 fell 2.04 cents or 0.78 percent to $2.6067 per gallon, trading from $2.5920 to $2.6350.

May heating oil HOK8, also debuting as a new front-month contract, was down 4.03 cents or 1.39 percent at $2.8658 a gallon, trading $2.8545 to $2.9160.

Ahead of Wednesday's government inventory data, analysts in a preliminary Reuters poll forecast on Monday an average 2.3-million-barrel build in domestic crude oil inventories, a drop of 2.3 million barrels in gasoline stocks and a 1.5-million-barrel drawdown in distillate supplies. [EIA/S]