Energy prices fell Wednesday ahead of a government report that could show whether supplies of crude and gasoline are growing tighter as prices at the pump rise.
An oil industry report released late Tuesday suggested that the amount of crude and gasoline held in storage, which has remained at historically high levels for months, is falling.
Refiners are buying less crude both because the price has been spiking and because demand for fuel remains relatively low.
That is part of the reason why retail gasoline prices have been on a two-week upswing.
Yet the influx of money in energy markets is being driven by the weak dollar, and on Wednesday the U.S. currency strengthened slightly.
Benchmark crude for December delivery fell 48 cents to $79.07 a barrel on the New York Mercantile Exchange.
"Even with supply underlying the market, the current interest for energy swirls around the economy and the dollar," said PFGBest analyst Phil Flynn.
Retail gas prices climbed for the 15th straight day, with the average pump price for a gallon of regular unleaded adding eight-tenths of a cent overnight to $2.683, according to auto club AAA, Wright Express and Oil Price Information Service. That's 8.7 cents higher than last week and 5.4 cents above what it was at this point last year.
On Tuesday, retail gasoline prices rose above what they were 12 months before, the first time that has happened this year. That is largely because gasoline prices were plunging at this point in 2008 because of the meltdown on Wall Street.
Oil has retreated from a one-year high of $82 a barrel hit last week as investors look for signs of a sustainable U.S. economy to justify further crude price gains.
The dollar is dominating energy prices right now while there are mixed financial signals that could weigh on energy prices.
The Commerce Department on Wednesday said orders to factories for items that are expected to last at least three years, like autos, computers and aircraft, rose 1 percent in September, matching economists' expectations.
On Tuesday, the Conference Board said its Consumer Confidence Index fell unexpectedly in October to its second-lowest reading since May while the Standard & Poor's/Case-Shiller home price index gained the third straight month in August.
"As long as the equities markets stay stable and the perception is out there that the global economy will grow, then the price of oil should go up," Seattle-based Sander Capital Advisors said in a report.
In other Nymex trading, heating oil fell 1.4 cents to $2.0411 a gallon. Gasoline for November delivery dropped 2.35 cents to $2.047 a gallon. Natural gas for November delivery rose 3.1 cent2 to $4.588 per 1,000 cubic feet.
In London, Brent crude for December delivery fell 82 cents to $77.10 on the ICE Futures exchange.
