Oil settles lower, giving up earlier gains, 2nd-LdWritethru, US

Oil prices fell Tuesday as traders retreated from early optimism about the health of corporate America and focused on the government's weekly petroleum inventories report due Wednesday.

Benchmark crude for November delivery lost 34 cents to settle at $76.18 a barrel on the New York Mercantile Exchange. Prices rose as high as $77.12 a barrel earlier in the session.

At the pump, the national average for a gallon of regular dipped to $2.691 on Tuesday, according to AAA, Wright Express and the Oil Price Information Service. That's 3 cents lower than a week ago, although it remained 19.2 cents higher than a year ago.

Traders mulled the Conference Board's monthly report on consumer confidence, which fell to its lowest level since February. Things looked brighter in Europe, where the latest data showed Germans grew more confident in their nation's economic recovery.

U.S. investors applauded corporate deals that included Endo Pharmaceuticals $1.2 billion bid for Qualitest Pharmaceuticals. That followed Monday's announcements that Southwest Airlines will buy AirTran Airways and Wal-Mart plans to acquire South African retailer Massmart. The Dow Jones Industrial Average closed about 46 points higher. The S&P 500 and the NASDAQ were up as well.

Energy traders are looking ahead to the government's weekly report on petroleum supplies for signs that huge inventories of crude will start to fall, according to Andrew Lebow, a senior vice president and broker at MF Global.

Most traders "are anticipating that as we head into the fourth quarter and into the first quarter that we're going to start to see the U.S. stock overhang to work off slowly but surely," he said. "As a result, they think that prices could appreciate modestly."

The Energy Department releases data on oil and gasoline inventories on Wednesday. A significant drop in supplies may not show up in this week's report. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., expect that crude oil inventories grew by 2.2 million barrels, gasoline supplies increased by 800,000 barrels and distillate stocks, which include diesel and heating oil, expanded by 400,000 barrels.

In other trading on the Nymex, heating oil added 0.17 cent to settle at $2.1245 a gallon, gasoline gave up 0.09 cent to settle at $1.9479 a gallon and natural gas gained 3.7 cents to settle at $3.837 per 1,000 cubic feet.

In London, Brent crude rose 14 cents to settle at $78.71 a barrel on the ICE Futures exchange.

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Associated Press writers Pablo Gorondi in Hungary and Alex Kennedy in Singapore contributed to this report.