By Laura Mandaro & Polya Lesova, MarketWatch
SAN FRANCISCO (MarketWatch) -- Oil futures tipped lower in choppy trading after rising past $81 a barrel Monday, torn between strength in the U.S. dollar and a regional Federal Reserve survey suggesting the U.S. recession may have already ended.
Natural-gas prices took a more dramatic turn, sinking more than 5% as traders looked ahead to warm weather in the Northeast to cash out on some of the roughly 70% gains notched by the fuel since early September.
Crude oil for December delivery fell 42 cents to $81.31 a barrel in electronic trading on Globex.
The dollar briefly climbed off a fresh 14-month low against the euro before resuming a modest drift lower. U.S. stocks turned lower, led by declines in financials.
December oil has had a volatile day so far.
The contract touched an intraday high of $81.59 a barrel earlier. Those gains had erased earlier losses stemming from word of a ceasefire in Nigeria's key oil producing region.
The commodity is also confronting persistent worries over weak demand and ample supply. The OPEC cartel repeated it might hike production targets at its December meeting as oil prices rise above $75, according to a media report.
"This is a market being influenced by upside forces right now," said Phil Flynn, vice president at futures trading and research firm PFG BEST Research in Chicago, about oil's earlier rise.
"With the dollar still showing significant weakness, the market continues to go higher," Flynn said. "This market is not following supply and demand fundamentals. The dollar weakness is causing the bulls to come in."
The U.S. dollar spent the early New York trading day lower after a Chinese central bank researcher called for moving some of the country's massive foreign reserves into euro and yen holdings.
The dollar index (DXY 75.63, +0.19, +0.25%) , which tracks the performance of the greenback against a basket of other major currencies, recently traded at 75.434, down from 75.488 late Friday.
Up nearly 100 points earlier on, the Dow Jones Industrial Average (INDU 9,870, -102.10, -1.02%) fell 48.44 points to 9,923.74.
Natural gas falls
Also on Globex, November natural-gas futures tumbled 25 cents, or 5.3%, to $4.536 per million British thermal units.
Natural-gas prices have shot up from about $2.71 per Btu in early September.
"Even though rig counts remained low, ample supply and above normal temperatures have prompted profit-taking," wrote analysts at MF Global Energy.
