Oil gets push back over $114

Oil prices rebounded Tuesday, jumping back above $114 a barrel after the dollar weakened against the euro and a rally in heating oil pulled new buyers into energy markets.

Light, sweet crude for September delivery rose $1.66 to settle at $114.53 on the New York Mercantile Exchange, after alternating between positive and negative territory earlier in the day. The September contract expires today, adding to the volatility.

At the pump, gas prices in this region held steady after dropping nearly 36 cents from a record set in July at $4.058. A gallon of regular in the Bradenton-Sarasota-Venice was selling for $3.699, AAA reported. A month ago, the price was $4.04 while a year ago it was $2.735.

Nationally, retail gas prices continued their decline, suggesting that cash-strapped Americans are still cutting back on their driving. A gallon of regular slipped another penny overnight to a new national average of $3.73.

Crude began the day lower after Tropical Storm Fay missed oil and gas installation in the Gulf of Mexico, easing concerns about a disruption in supplies. But prices later spiked more than $3 a barrel, apparently driven higher by a surge in heating oil futures that triggered technical buy orders in energy markets, analysts said.

Heating oil futures rose 3.89 cents to settle at $3.1237 a gallon on the Nymex after earlier rising more than 3 percent to $3.1998.

"Crude's just getting pulled up by heating oil. It was a quick pop and technical triggers may have been hit," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.

Also supporting prices Tuesday was a slightly weaker dollar compared to the euro. The 15-nation euro traded at $1.4783, up from $1.4697 late Monday in New York. A falling greenback encourages buying among investors seeking commodities like oil as a hedge against inflation or weakness in the dollar.

Some recovery in oil was expected after steep price drops over the past month. Oil prices have shed about $35, or 24 percent, from their all-time trading record of $147.27 reached July 11 amid mounting evidence that a cooling global economy and high fuel costs are curtailing demand for energy.

Olivier Jakob of Petromatrix in Switzerland, however, said it was too early to assert that oil prices had reached a bottom, "especially since there is a clear lack of buying momentum."

Regarding oil fundamentals, Jakob said it was worth keeping an eye on how China's import of oil products will develop after the buildup of stocks for the Olympics. Reports of lower demand there could put further downward pressure on prices.

Meanwhile, Venezuela says it is prepared to propose an oil production cut at the next OPEC meeting if crude prices decline further.

Information from the Associated Press was used in this report.