Oil Prices Above $79 On Gulf Storm, Weaker Dollar

DIRK LAMMERS

Oil prices shot above $80 a barrel Monday as a weakened U.S. dollar created more turbulence in energy markets than a storm heading into the Gulf of Mexico.

Ida had helped push crude prices higher all morning. Normally, the storm's demotion from hurricane to a tropical storm would depress crude prices. But the dollar is the real driver of energy markets at the moment. So, when the euro pushed passed the $1.50 level for the first time this month, oil prices rose even further.

Investors holding euros or other strong currencies can buy more dollar-based crude when the U.S. currency falls, and that has sent prices higher throughout the year.

Demand for oil is still weak, but investment in crude futures has paid off this year. A barrel of oil cost $32 in December.

Benchmark crude for December delivery on Monday rose $2 to settle at $79.43 a barrel on the New York Mercantile Exchange. A barrel passed $80 by early afternoon before easing back.

Meanwhile, the Energy Information Administration in its weekly update released Monday afternoon put the national average price for a gallon of unleaded regular at $2.666, down 2.8 cents from the previous week and the first decline after five straight weekly increases. The biggest drop was in the Midwest, where pump prices fell almost 6 cents.