March 24 (Bloomberg) -- Crude oil fell for a third day in New York on concern the slowing U.S. economy will cut consumption and the dollar's gain will reduce demand for commodities as a hedge against inflation.

Oil dropped as much as 1.8 percent to $100.02 a barrel after losing 7.6 percent last week. U.S. crude prices are likely to fall toward $90 this spring as the country's slowing economic growth encourages traders to exit commodity markets, Goldman Sachs Group Inc. said in a report on March 20.

``Fundamentals have been weak for some time now, so the recent trigger has definitely been the bottoming dollar,'' said Anthony Nunan, an assistant general manager for risk management at Mitsubishi Corp. in Tokyo. Investors ``are still not convinced the downtrend has finished.''

Crude oil for May delivery traded at $100.67 a barrel at 10:10 a.m. London time. Futures are still up 60 percent in the past year.

The dollar climbed as high as $1.5342 a euro from $1.5431 in New York on March 21, when it posted its first weekly advance against the euro in more than a month.

The threat of recession and a credit freeze caused the U.S. Federal Reserve to cut its main lending rate by three-quarters of a percentage point on March 18.

Crude oil may extend declines after dropping last week for the first time in almost two months, Andy Lipow, president of Houston-based Lipow Oil Associates LLC, said in a Bloomberg interview today.

``We have the ingredient for a pullback in prices in the next few months,'' he said. ``Worldwide, crude oil inventories are rising and we are in the midst of a significant turnaround season in the U.S.''

Commodities

The Reuters/Jefferies CRB Index of 19 commodities tumbled 8.3 percent last week, the most since at least 1956, after touching a record on Feb. 29.

``Investors are re-allocating assets and taking profit from commodities to offset earlier losses from equities,'' said Tetsu Emori, a fund manager at Astmax Co. in Tokyo. ``On the fundamentals side, things are gloomy with demand to drop.''

Brent crude for May settlement traded at $99.57 a barrel in London at 10:16 a.m. local time after falling as much as $1.46, or 1.5 percent, to $98.92 a barrel on the ICE Futures Europe exchange.

Commodities are undergoing ``cyclical weakness,'' and fundamentals will reach their ``weakest point'' in April as economic conditions and high prices weigh on demand, Goldman analysts including Jeffrey Currie in London wrote in a report. Oil will rebound in the second half, returning to $105 by the end of the year, they said.

U.S. Consumers

U.S. consumer spending rose 0.1 percent last month, the smallest gain in more than a year, according to the median estimate of economists surveyed by Bloomberg News before a Commerce Department report due March 28.

Combined sales of new and existing homes dropped to the lowest level in at least nine years, government and private figures may also show. The biggest job losses in five years and record fuel costs are eroding consumer confidence and spending.

Crude oil prices may fall this week as the dollar rebounds and the slowing U.S. economy curbs consumption of fuels.

Twenty-nine of 34 analysts surveyed by Bloomberg News, or 85 percent, said prices will drop through March 27. Four of the respondents, or 12 percent, said futures will rise and one forecast that prices will be little changed.

OPEC Output

OPEC has no plans to reduce output after prices fell from a record, Chakib Khelil, the president of the producer group, said on March 22. OPEC controls more than 40 percent of the world's crude supply.

``We decided to keep the current production and we are not going to cut output,'' Khelil, who is also the oil minister of Algeria, told reporters in Algiers.

OPEC doesn't meet again until Sept. 9, though the group will hold an informal meeting in Rome on April 20, Khelil said.

The 13-member Organization of Petroleum Exporting Countries decided to keep output quotas unchanged at a meeting on March 5. The group produced 32.27 million barrels a day in February, according to Bloomberg estimates.

International demand may decline by 1.2 million barrels a day in the second quarter of the year, Khelil said. Prices may remain between $80 and $110 a barrel, he said.

Total U.S. implied fuel demand for the four weeks ended March 14 dropped 3.2 percent from a year earlier, the Energy Department said on March 19.

Saudi Arabia, the world's biggest oil exporter, will work with OPEC and non-OPEC countries to ensure stability and ``prevent the effects of harmful speculation,'' according to a statement from the Supreme Council of Petroleum and Mineral Affairs posted on its Web Site late yesterday.

To contact the reporter on this story: Ayesha Daya in Dubai adaya1@bloomberg.net

Last Updated: March 24, 2008 06:23 EDT