Oil prices slipped Monday as the dollar strengthened and traders hunkered down ahead of some important economic news later this week.
Benchmark oil for November delivery lost 25 cents at $82.41 a barrel in midday trading on the New York Mercantile Exchange but remained higher than a week ago.
At the pump, the national average for a gallon of regular gasoline rose to $2.807, according to AAA, Wright Express and oil Price Information Service. That's 11.8 cents higher than it was a month ago and 32.8 cents higher than a year ago.
The dollar grew stronger against other currencies on Monday. That pressured oil prices, because a stronger dollar makes crude, priced in dollars, less attractive to investors who buy it with other currencies. In the past week, crude prices have stayed above $80 a barrel as traders set aside the reality of plentiful supplies and weak demand for oil and gas to focus on the ups and dow3ns of the dollar versus the euro.
Tradition Energy analyst Gene McGillian said that if the dollar gets weaker and stock prices hold their ground, oil may reach its high for the year of $87.15 a barrel, which it hit in early May. That could send retail gasoline prices up an additional 10 cents to 15 cents in the next month.
But traders eventually will have to take the supply glut into consideration without improving economic news. "You don't have signs that the economy is improving enough to really tear down some of those inventory levels or that fuel demand is picking up," he said.
Oil analyst and trader Stephen Schork said crude oil hovering in the mid-$80 a barrel range translates into about $3 a gallon at the pump. "As long as traders continue to chase the dollar lower, they will continue to push oil prices higher," he said in his newsletter, The Schork Report.
Oil traders also monitor stock markets for signs of consumer confidence. Stocks were muted Monday without any major economic or earnings reports to move them. The Dow Jones Industrial Average was up about 11 points at midday. The NASDAQ and the S&P 500 were slightly higher as well.
Later this week, the government will release reports on inflation, retail sales and consumer sentiment, which could have an impact on oil and gas prices.
In other Nymex trading, heating oil lost 0.24 cent at $2.2795 a gallon, gasoline added 1.35 cents at $2.1647 a gallon and natural gas lost 2.4 cents at $3.627 per 1,000 cubic feet.
In London, Brent crude dropped 21 cents at $83.82 on the ICE futures exchange.
Associated Press writers Barry Hatton in Lisbon, Portugal, and Alex Kennedy in Singapore contributed to this report.