NEW YORK – Oil prices retreated on Thursday after rising past $84 a barrel earlier in the session. Benchmark oil for November delivery lost 35 cents at $82.88 a barrel on the New York Mercantile Exchange.
The contract added 41 cents to settle at $83.23 on Wednesday.
At the gas pump, prices rose again, to a national average of $2.768 for a gallon of regular. That's up 1.7 cents from Wednesday and more than 30 cents higher than a year ago. Higher oil prices are driving up retail gas prices.
Crude prices have stayed above $80 over the last week as the dollar weakened against the euro. Energy analysts, such as The Schork Report, have said the price of oil recently has been closely tied to the dollar-euro connection. Dollar-based commodities, such as oil, become cheaper for investors with other currencies when the dollar drops. The euro rose against the dollar again on Thursday.
Still, oil supplies remain high and demand does not show signs of a significant pick-up. The Energy Information Administration said Wednesday the nation's crude inventories rose and are 7 percent above year-ago levels.
"The fundamental picture for crude was quite bearish," The Schork Report said. "Put simply, we are producing more crude oil and refining less of it, the textbook definition of oversupply."
Oil prices may be due to fall back from their recent highs. "Prices are extremely overbought," energy consultants Cameron Hanover noted. So a sell-off is not out of the question.
Economic data can tip the balance as well. The news was mixed on Thursday. While the Labor Department said jobless claims fell last week, PepsiCo narrowed its earnings forecast. Alcoa reports earnings after the market closes. Analysts expect Alcoa's third-quarter profits to be lower than in the second quarter but higher than a year ago.
In its weekly report on natural gas inventories, EIA said supplies in storage grew by 85 billion cubic feet. That's more than what analysts expected, according to Platts, the energy information arm of McGraw-Hill Cos. Abundant supplies and a heating season that's slow to start are pushing prices down.
"Temperature forecasts have trended slightly warmer for the next five days, to above- to well-above average throughout most of the eastern half of the country," said Addison Armstrong, senior director of market research at Tradition Energy.
Natural gas fell 15.3 cents to $3.712 per 1,000 cubic feet. In other Nymex trading in November contracts, heating oil lost 1.98 cents at $2.2880 a gallon and gasoline dropped 1.03 cents to $2.1456 a gallon.
In London, Brent crude fell 65 cents to $84.41 a barrel on the ICE Futures exchange.
__AP Writer Alex Kennedy in Singapore contributed to this story.