UPDATE 10-Oil ends sharply down on strong dollar, inventories

                                
 * Steepest drop in 3 months as retreats from 19-mth highs
                                
 * U.S. data expected to show higher crude, fuel stocks
                                
 * Strong dollar helps pressure oil
                                
 * Coming up: U.S. API weekly oil stock data at 2030 GMT
                                
 (Recasts, updates prices)
                                
 NEW YORK, May 4 (Reuters) - U.S. crude oil fell 4 percent
on Tuesday in its steepest loss in three months as the dollar
strengthened and oil markets awaited inventory reports expected
to show rising U.S. crude and fuel stocks.
                                
 The dollar's rise came as investors turned risk averse and
sold oil and equities amid concerns that Greece's debt problems
could spread to other euro zone countries. A stronger dollar is
usually bearish for oil as it reduces demand for commodities
traded in dollars.
                                
 "The market is anticipating reports of much higher crude
inventories and the stronger dollar isn't helping either," said
Carsten Fritsch, commodities analyst at Commerzbank.
                                
 U.S. crude for June <CLc1> fell $3.45, or 4 percent, to
settle at $82.74 a barrel, after hitting an intraday high of
$87.15 on Monday, the strongest front-month price since $89.82
traded on Oct. 9, 2008.
                                
 Tuesday's drop was the largest one-day percentage loss
since the 4.99 percent slide on Feb. 4, according to Reuters
data.
                                
 Brent crude <LCOc1> slid $3.27 to settle at $85.67, but
held on to its big premium over U.S. West Texas Intermediate
crude futures, or also known as WTI.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
                                
For crude price technical view, see: [ID:nSGE64300R]
                                
For a technical chart on crude prices, click:
 http://graphics.thomsonreuters.com/gfx/WT_20100405084512.jpg
                                
 For a graphic on dollar/oil correlation, click
 http://graphics.thomsonreuters.com/gfx/RSW_20100405150342.jpg
                                
 For a chart showing Brent premium over U.S. crude, click
 http://link.reuters.com/qap52k
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
                                
 BP <BP.L> continued efforts to stop oil gushing into the
Gulf of Mexico from a ruptured offshore well, but easing fears
of disruptions to the key refining hub on the Gulf Coast
weighed on the markets. [ID:nN04241766]
                                
 "Oil has taken a dive ... on the back of downgraded
expectations that the Gulf of Mexico oil slick will materially
disrupt refining oil production operations in the region,"
according to J.P. Morgan's Lawrence Eagles.
                                
 The U.S. Coast Guard said the oil slick had not yet
disrupted shipping [ID:nN04265264] and operations at the key
Louisiana Offshore Oil Port were normal. [ID:nN04261693]
                                
 The euro tumbled to a one-year low beneath $1.30, hit by
fear that emergency aid for Greece may not prevent debt crises
in other euro zone countries. [USD/]
                                
 U.S. stocks fell on concerns about Greece's debt problems
and despite data showing new orders received by factories rose
unexpectedly and pending home sales rose to a five-month high
in March. [.N]
                                
 U.S. retail gasoline demand was unchanged last week versus
the previous week but was down 2.3 percent against the year-ago
period, according to MasterCard SpendingPulse. [ID:nNLL4GE61J]
                                
 U.S. gasoline and heating oil futures also fell sharply on
Tuesday, with June gasoline futures <RBM0> settling more than
11 cents lower at $2.32 a gallon.
                                
 Weekly oil inventory reports were expected to to show U.S.
crude inventories rose last week as a discount for prompt oil
widened the contango structure of the futures curve, a Reuters
survey on Tuesday showed. [EIA/S]
                                
 The American Petroleum Institute's report arrives on
Tuesday at 4:30 p.m. EDT. The U.S. Energy Information
Administration's report follows on Wednesday morning.
                                
 The contango, where front-month contracts are weaker than
future months, had strengthened on Tuesday to put front-month
June crude around $3 less than the July contract <CL-1=R>.
                                
 The back end of the curve also has strengthened, with U.S.
futures for five years ahead <CLc61> widening their premium
over the front-month to $12.69 from under $5 a month ago.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
                                
 For a graphic showing how U.S. crude futures for five years
forward <CLc61> have risen relative to the front-month, click
                                
 http://link.reuters.com/fet52k
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 (Additional reporting by Gene Ramos in New York, Christopher
Johnson in London and Judy Hua in Singapore; Editing by
Marguerita Choy)