Oil settled slightly lower Monday after the dollar rose in afternoon trading.
Benchmark crude for June delivery fell 41 cents to settle at $113.52 a barrel on the New York Mercantile Exchange. In London, Brent crude lost 77 cents to settle at $125.12 a barrel on the ICE Futures exchange.
Oil dropped below $111 a barrel early Monday, after President Barack Obama announced Osama bin Laden was killed by U.S. forces in Pakistan. The dollar rose at the same time. Oil is priced in dollars, so as the dollar strengthens oil becomes less attractive to investors with foreign currency, and the price falls.
Later in the day, the dollar weakened and oil recovered some ground.
"It's kind of a see-saw effect," said Michael Lynch, president of Strategic Energy & Economic Research. "There will be a fear, I think, in the short-term in the markets that something might happen in the next week or two. I do think in the longer term, it suggests likely more stability in the Middle East."
Lynch thinks bin Laden's death eventually may represent a tipping point for global oil and commodities prices, and the exit of Libya's Moammar Gadhafi could remove further uncertainty about oil supplies in the region.
Tom Bentz, director of BNP Paribas Commodity Futures, said traders' main concerns are the lingering issues of sovereign debt and the economic recovery. "For the most part nothing's really changed," he said. "Osama bin Laden, whether he's here or not, has nothing to do with the price of oil."
Gas pump prices are still climbing. The national average for a gallon of regular rose by a penny on Monday to $3.95. That's 32 cents more than a month ago and $1.07 higher than a year ago. Drivers in 13 states and the District of Columbia are paying over $4 a gallon.
In other trading on the Nymex, heating oil fell 2.37 cents to settle at $3.2521, gasoline futures lost 5.05 cents to settle at $3.3479 and natural gas settled a fraction of a cent higher at $4.763 per 1,000 cubic feet.