Crude oil futures fell on Tuesday after a U.S. government report predicted national fuel demand may drop and separately, the dollar rose.

The U.S. Energy Department said today that demand for gasoline in the top consumer of oil will drop in the summer for the first time in 17 years due to high oil prices and a struggling economy.

Crude oil futures for May fell 32 cents, or 0.29 percent to 108.77 at 12:24 p.m. on the New York Mercantile Exchange. Yesterday prices rose $2.86 to $109.09 a barrel, their highest increase since March 18.

The dollar was strong for a second straight day on Tuesday. The U.S. currency was trading at $1.5703 per euro. Commodities tend to rise when the dollar is down as investors compensate for inflation.

Forecasts anticipate distillate fuel stockpiles, including heating oil and diesel dropped between 1.4 to 1.5 million barrels on the week ended March 4. The weekly report on inventories from the Energy Department will be released tomorrow morning.

The Energy Department predicted oil prices will average $100.61 a barrel, about 7 percent above its forecast in March, according to the department's monthly Short-Term Energy Outlook.

Crude futures for delivery in three months fell 0.47 cents or 0.44 percent to $106.48 a barrel on the London ICE Futures Exchange today.