Business

NEW YORK (AP) ― Oil prices fluctuated Monday, teetering between positive and negative territory on a waffling dollar and a tropical depression brewing in the Caribbean.

Light, sweet crude for October delivery fell 14 cents to $114.45 a barrel on the New York Mercantile Exchange after earlier rising as high as $116.06. Trading was light heading into the Labor Day holiday now a week away, adding to the volatility that has characterized the market in recent days, including a dramatic $12 price swing between Thursday and Friday.

At the pump, a gallon of regular gasoline shed almost a penny overnight to a national average of $3.681, according to auto club AAA, the Oil Price Information Service and Wright Express. Gas prices have dropped 15 cents a gallon in the last two weeks, according to the Lundberg Survey of 7,000 gas stations nationwide.

Crude traded erratically for the most of the day in virtual lockstep with a wavering U.S. dollar, which has become the focal point for investors trying to figure out whether crude is going higher or lower. The greenback gained ground against the euro earlier Monday, fell back, then gained again in a span of a few hours. A stronger dollar makes oil less attractive to investors who buy commodities as a hedge against inflation and weakness in the U.S. currency.

"So goes the dollar, so goes the energy complex these days," said Stephen Schork, an analyst and oil trader in Villanova, Pa.

Oil's uncertainty Monday followed a round of hyper-volatile trading last week. On Friday, crude fell $6.59, or 5.4 percent, to $114.59 a barrel. It was crude's largest single-day price drop in percentage terms since Dec. 27, 2004. That decline wiped out gains from an almost $6 rally on Thursday.

Supporting prices Monday was a newly formed tropical depression that raised worries of damage to oil and natural gas installations in the Gulf of Mexico. The seventh depression of the Atlantic hurricane season was heading for Haiti and the Dominican Republic with maximum sustained winds of 35 mph, forecasters said.

"The storm is trying to pull the market higher, but it's not getting much of a boost," said Phil Flynn, analyst at Alaron Trading Corp. in Chicago.

Analysts said the market's inability to rally in the face of bullish news such as threats to energy supplies from Russia's invasion of Georgia and another tropical disturbance suggests that crude remains in a downward trend. Crude oil has dropped about $30, or 25 percent, from record trading levels above $147 a barrel reached last month.

"From the Caribbean to the Caspian, we've had one bullish headline after another and the market cannot generate a (sustained) rally," Schork said. "It certainly doesn't bode well for anyone who owns commodities."

Still, unresolved tensions between the U.S. and Russia over the conflict in Georgia could rekindle supply worries and send prices higher.

Russia pulled the bulk of its troops and tanks out Friday under a cease-fire agreement, but built up its forces in and around South Ossetia and Abkhazia, another separatist region. They also left other military posts at locations inside Georgia proper.

A U.S. Navy destroyer loaded with humanitarian aid reached Georgia's Black Sea port of Batumi on Sunday, a move that a Russian general suggested would worsen tensions between the former Cold War foes.

A Monday vote by Russian lawmakers unanimously asking President Dmitry Medvedev to recognize the independence of Georgia's two rebel provinces added to the concerns of energy markets.

Despite the conflict, some analysts said energy flows from Russia to the West were safe.

"We continue to see little chance for oil to be used by Russia as a bargaining tool," said Olivier Jakob of Petromatrix in Switzerland. "Oil is the weapon of last resort, not of first resort ... and it would make no sense for Russia to limit exports of crude or products to European countries."

In other Nymex trading, heating oil futures rose about half a penny to $3.1365 a gallon, while gasoline prices fell about 2 cents to $2.8479 a gallon. Natural gas futures fell 18.9 cents to $7.653 per 1,000 cubic feet.

In London, October Brent crude fell 36 cents to $113.56 on the ICE Futures exchange.

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