NEW YORK - Oil prices fell yesterday, dropping close to $100 a barrel as a stronger dollar diminished the appeal of energy and other commodities futures.
Retail gas prices, meanwhile, fell further from recent records, while diesel prices declined slightly.
Many investors view commodities such as oil as a hedge against inflation and a falling dollar, so the greenback's advance yesterday, after a stronger showing the past few trading days as well, made oil lose some of its recent allure. A stronger dollar also makes oil more expensive to overseas investors.
Many analysts believe the dollar's decline was the primary reason oil surged to a record near $112 a barrel early last week. But the effect tends to reverse when the dollar rises.
Light, sweet crude for May delivery fell 98 cents to settle at $100.86 a barrel on the New York Mercantile Exchange.
However, the decline was far from decisive, and there were signs that some investors are willing to look beyond the dollar for future price direction. Prices alternated between gains and losses all day long as a tug of war took place between the speculators who sold as the dollar gained strength, and investors who bought on a view that the economy - and demand for oil and gasoline - may not be as weak as initially thought.
Exaggerating yesterday's price gyrations were lower than normal trading volumes due to a holiday in Europe, analysts said.
Gas prices in Massachusetts are down a penny, the first decline in six weeks.
A weekly survey by AAA Southern New England found a gallon of self-serve regular averaging $3.12 yesterday, down one cent from the same time last week.
The auto club says Massachusetts is 14 cents below the US average price of $3.26 per gallon.