April 29 (Bloomberg) -- Natural gas declined as crude oil fell from a record and the dollar strengthened against the euro.

Oil fell after a strike ended, allowing the reopening of a pipeline supplying about a third of all U.K. oil. The dollar advanced to a three-week high against the euro amid speculation the Federal Reserve will resist additional reductions of the target lending rate.

``The market is going to pause at these levels and probably have a significant pullback, if the Fed comes out tomorrow with very bullish dollar news,'' said Michael Rose, trading director at Angus Jackson Inc. in Fort Lauderdale, Florida. ``If they come out and say that they are not going to be so quick to cut in months to come'' that will support the dollar.

Gas for June delivery fell 48.7 cents, or 4.3 percent, to settle at $10.842 per million British thermal units at 3:06 p.m. on the New York Mercantile Exchange. Gas has advanced 45 percent this year.

Crude oil for June delivery fell $3.12, or 2.6 percent, to settle at $115.63 a barrel in New York. Oil is 20 percent higher so far this year.

Oil fell after BP Plc's North Sea Forties pipeline restarted after a two-day shutdown. Oil rose to a record $119.93 yesterday.

As the dollar weakened against the euro, investors sought alternatives and commodities soared, led by natural gas. A stronger dollar tends to dull the allure of commodities and increases the attractiveness of equities.

The dollar is heading for its first monthly advance against the euro this year on signs the U.S. slowdown is spreading to Europe.

Interest Rates

Federal Reserve policymakers meet today and tomorrow to set interest rates. Futures contracts on the Chicago Board of Trade show there's an 82 percent chance the Fed will cut its target for overnight lending between banks by a quarter percentage point to 2 percent. Traders have pared their bets from a month earlier, when 48 percent expected a half-point cut.

``There was an incredibly strong move in the dollar this morning and that set the tone,'' said Michael Dane, an analyst at SunTrust Robinson Humphrey in Houston. ``Oil is off and gas is followed its lead. There's a lot of anticipation out there that the Fed is going to stop lowering and it's all feeding through.''

The currency rose 0.6 percent to $1.5565 per euro at 3:12 p.m. in New York, from $1.5657 yesterday, for a monthly gain of 1.4 percent.

Slowing Demand

``The trigger was the sharp sell off in the petroleum markets this morning and concern about the broad-based sell off tomorrow, if the dollar strengthens,'' said Jim Ritterbusch, president of Galena, Illinois-based energy consulting firm Ritterbusch & Associates.

Gas prices also dropped amid signs of slowing demand. The 14-day outlook for temperatures in the main gas-consuming regions of the U.S. calls for typical or warmer-than-average weather, according to the U.S. Climate Prediction Center.

``In terms of really strong demand drivers, you don't have that really deep cold or similar environment'' prompting natural gas demand, said George Hopley, a Barclays Capital analyst in New York. ``In the absence of a strong demand driver,'' gas is following oil.

Gas may slide into the $9 to $10 per-million-Btu range, though lagging U.S. imports of liquefied natural gas will probably keep prices from falling further, said Dane.

The flow into the U.S. of LNG, or gas super-cooled to a liquid for transport by ship to markets not connected by pipelines, is averaging about 900 million cubic feet a day so far this month, from 3.2 billion cubic feet a day in April 2007, Stacy Nieuwoudt, an analyst at Tudor, Pickering, Holt & Co. in Houston, said in note today.

To contact the reporter on this story: Jordan Burke in New York at jburke29@bloomberg.net.

Last Updated: April 29, 2008 15:22 EDT