NEW YORK – Oil prices on Monday bounced back above $83 a barrel, as stocks rose on encouraging earnings reports and the dollar weakened against the euro. Benchmark crude for November delivery rose $1.83 to settle at $83.08 a barrel on the New York Mercantile Exchange.
At the pump, gas prices are at a national average of $2.834 for a gallon of regular, according to the Energy Department's Energy Information Administration. After a two-week climb, pump prices are about 26 cents higher than a year ago. Drivers on the West Coast pay the most for gas: over $3 a gallon in most places. The lowest prices are in the Gulf Coast states, where gas stations charge an average of $2.68 a gallon.
Average gas prices range from $2.63 to $3.17 a gallon in major cities. San Francisco tops the price charts, Houston is at the bottom. In between, gas is going for $3.15 a gallon in Los Angeles, $3.05 in Seattle, $2.99 in Chicago, $2.80 in Boston and Cleveland, $2.88 in Miami, $2.86 in New York and $2.70 in Denver.
Oil prices got a boost Monday from rising stock prices. The Dow Jones Industrial Average closed about 81 points higher. Financial shares improved after Citigroup announced better-than-expected earnings. The NASDAQ and the S&P 500 rose as well. A number of major companies report this week, as earnings season begins in earnest. Investors will watch those results for signs of the nation's economic health and the prospects for stronger energy demand.
The dollar weakened after some early gains against the euro and other currencies. Oil, priced in dollars, can become more appealing to foreign buyers as the dollar gets weaker. With the Federal Reserve likely to take action next month to keep the economic recovery going, the dollar is likely to fall again and keep oil prices at or above current levels.
"The fundamentals still do not look strong, but suddenly $80 a barrel looks like it may be becoming a new support level rather than a resistance line," said a report from KBC Energy Economics in London.
The Energy Department's weekly report on crude inventories on Wednesday may affect prices as well. Although supplies are abundant, shrinking inventories could support higher prices. Last week's EIA report showed a decline in inventories, but that did not immediately boost oil prices.
"It is difficult to say, for sure, that those declines did anything to help prices move higher over the longer term," said energy consultants Cameron Hanover. "Crude oil stocks are likely to depend upon crude oil imports, which are extremely low right now. We cannot expect them to remain this low."
Some analysts said last week's decline in crude supplies was due mainly to fewer imports of oil.
The price of natural gas prices continue to fall. The contract settled at $3.431 per 1,000 cubic feet, down 10.4 cents. More mild weather across much of the country won't help drain the bulging supplies on hand. "Weather forecasts continue to provide little support, with normal to above-normal temperatures expected for the remainder of this month and into early next month throughout the eastern half of the country," said Addison Armstrong, senior director of market research at Tradition Energy:
In other Nymex trading, heating oil rose 4.53 cents to settle at $2.2761 a gallon and gasoline gained 4.77 cents to settle at $2.1515 a gallon.
In London, Brent crude added $1.92 to settle at $84.37 a barrel on the ICE futures exchange.
Associated Press writers Pablo Gorondi in Budapest, Hungary, and Alex Kennedy in Singapore contributed to this report.