Crude, heating oil prices rally on weaker dollar

NEW YORK - Oil prices rebounded yesterday, jumping above $114 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, retail gas prices continued to decline, suggesting cash-strapped Americans are still cutting back on driving. A gallon of regular slipped another penny overnight to a national average of $3.73, almost 10 percent lower than record prices of $4.11 a gallon reached July 17, according to auto club AAA, the Oil Price Information Service, and Wright Express.

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 $3.12 a gallon on the Nymex.