Oil prices dip with consumers leery over economy

Oil prices which had been rising since late last week paused Tuesday on a new report showing that consumers remain leery of job losses and also growing evidence that U.S. crude supplies have grown.

Benchmark crude for November delivery fell 13 cents to settle at $66.71 on the New York Mercantile Exchange.

Crude has doubled in price since February, pulled higher by a six-month rally on Wall Street and a battered dollar. The U.S. currency is near its lowest point in the past year against the euro, and that makes dollar-based crude cheaper.

But in the past two weeks, oil has given up about $6 a barrel as supplies continue to build and demand remains woeful, though the number of miles driven by Americans is on the upswing.

Unemployment is at a 26-year high and figures to get worse when unemployment data for September is released on Friday.

At the same time, investors are dealing with conflicting economic data that can influence oil prices.

The New York-based Conference Board said Tuesday that consumer confidence fell unexpectedly in September, even though home prices rose for the third straight month in July.

Consumer confidence is up from what may have been the worst of the recession, but are still half of the historical norm.

Worries over the economy have kept energy prices in check and PFGBest analyst Phil Flynn said prices are going to have to fall further or crude and gasoline supplies will continue to grow.

On Wednesday the Energy Information Administration releases its weekly supply report, which is expected to show crude placed into storage grew by more than 2 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

Last week's report that showed a giant increase in inventory levels for crude and refined products played a big role in the recent decline in oil prices.

Burgeoning supplies have sent retail gas prices to two-month lows. After falling below $2.50 a gallon on Monday for the first time since July, the average price for gasoline fell another 1.2 cents overnight to $2.487 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service.

In other Nymex trading, gasoline for October delivery fell almost a penny to settle at $1.6281 a gallon, and heating oil rose about the same amount to settle at $1.7006 a gallon. Natural gas rose 4.5 cents to settle at $4.875 per 1,000 cubic feet.

In London, Brent crude fell a nickel to settle at $65.49 the ICE Futures exchange.

---

Associated Press writers Pablo Gorondi in Budapest and Alex Kennedy in Singapore contributed to this report.