Oil Prices Drop as Demand Concerns Resurface

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"The price of oil recently has been closely tied to the dollar-euro connection."

Oil prices retreated on Thursday after rising past $84 a barrel earlier in the session. Benchmark oil for November delivery lost 35 cents at $82.88 a barrel on the New York Mercantile Exchange.

The contract added 41 cents to settle at $83.23 on Wednesday.

At the gas pump, prices rose again, to a national average of $2.768 for a gallon of regular. That's up 1.7 cents from Wednesday and more than 30 cents higher than a year ago. Higher oil prices are driving up retail gas prices.

Crude prices have stayed above $80 over the last week as the dollar weakened against the euro. Energy analysts, such as The Schork Report, have said the price of oil recently has been closely tied to the dollar-euro connection. Dollar-based commodities, such as oil, become cheaper for investors with other currencies when the dollar drops. The euro rose against the dollar again on Thursday.

Still, oil supplies remain high and demand does not show signs of a significant pick-up. The Energy Information Administration said Wednesday the nation's crude inventories rose and are 7% above year-ago levels.

"The fundamental picture for crude was quite bearish," The Schork Report said. "Put simply, we are producing more crude oil and refining less of it, the textbook definition of oversupply."

Oil prices may be due to fall back from their recent highs. "Prices are extremely overbought," energy consultants Cameron Hanover noted. So a selloff is not out of the question.

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