NEW YORK – Oil prices tumbled below $82 a barrel on Thursday after rising past $84 earlier in the session. Benchmark oil for November delivery lost $1.56 to settle at $81.67 a barrel on the New York Mercantile Exchange.
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.
Oil prices may have been due to fall back from their recent highs. "Prices are extremely overbought," energy consultants Cameron Hanover noted. So a sell-off was not out of the question.
Crude prices have stayed above $80 over the last week as the dollar weakened against the euro. Energy analysts, including Stephen Schork, editor of 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, sending the dollar to an eight-month low, before the euro retreated.
Oil supplies remain high and demand does not show signs of a significant pick-up. The Energy Information Administration said Wednesday that the nation's crude inventories rose and are 7 percent above year-ago levels.
"The fundamental picture for crude was quite bearish," Schork said. "Put simply, we are producing more crude oil and refining less of it, the textbook definition of oversupply."
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 reported earnings after the market closed. The aluminum maker's third-quarter profits fell from a year ago, but it raised its outlook for global aluminum demand this year.
In its weekly report on natural gas inventories, EIA said supplies in storage grew by 85 billion cubic feet. That's more than 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 24.8 cents to settle at $3.617 per 1,000 cubic feet. It hit a 52-week low of $3.610 at one point in the session.
In other Nymex trading in November contracts, heating oil lost 5.60 cents to settle at $2.2518 a gallon and gasoline dropped 3.79 cents to settle at $2.1180 a gallon.
In London, Brent crude fell $1.63 to settle at $83.43 a barrel on the ICE Futures exchange.
__AP Writer Alex Kennedy in Singapore contributed to this story.