The three-week run in oil prices that pushed crude back above $80 a barrel took a breather Tuesday even as retail gasoline prices climbed for a sixth straight day.
Benchmark crude for April delivery fell $1.58 to $78.73 per barrel on the New York Mercantile Exchange. On Monday, the contract added 25 cents to settle at $80.31 on Monday.
Oil bottomed at $69.59 per barrel on Feb. 5. Crude has bounced between $70 and $80 for months in a tug-of-war between investors who believe an economic recovery and demand from China will pull prices higher and those who think soft demand in the U.S. will keep prices low.
"That's a fairly reliable pattern," said Jim Ritterbusch of Ritterbusch and Associates. "We don't have demand yet to sustain rallies above $80."
Ritterbusch blamed Tuesday's drop on profit taking, a strengthening dollar and progress toward ending a strike by refinery workers at a Total SA plant in France.
A surprisingly big drop in consumer confidence in February that dragged the stock market lower also pushed down oil prices.
Workers angry about the uncertain future of the Total plant have shut down over half of the country's refining capacity. French union officials said Total appears ready to maintain refining activities for the next five years at the plant.
The dollar moved higher against the euro on a report that showed that Germany, Europe's biggest economy, still is struggling to overcome the recession.
Because crude is traded in dollars, it becomes less expensive when the dollar rises and forces investors holding other currencies like the euro to pay more for the same amount of oil.
The nationwide average price for gasoline at the pump rose 1.2 cents overnight to $2.66 per gallon, according to auto club AAA, Wright Express and Oil Price Information Services.
Prices are now 5.6 cents higher in the past week and 75 cents above year-ago levels.
In other Nymex trading in March contracts, heating oil fell 4.84 cents at $2.0304 a gallon, while gasoline lost 3.79 cents at $2.0779 a gallon. Natural gas fell 3.8 cents to $4.857 per 1,000 cubic feet.
In London, Brent crude was down $1.63 at $76.98 on the ICE futures exchange.
---
Associated Press writers Pablo Gorondi in Budapest, Alex Kennedy in Singapore and Greg Keller in Notre-Dame-de-Gravenchon, France, contributed to this report.
