Crude prices close in on $75 per barrel because of the weakening US dollar

Oil prices near a new high for the year

Oil prices neared new highs for the year Tuesday as the dollar slipped against other major currencies, demonstrating how much the weakened U.S. currency can affect consumers across the world.

Prices have risen four straight days and the cost for a barrel of crude is up 4 percent since last week, even though most energy experts believe that the U.S. government will report again this week that more unused gasoline and oil is heading into storage.

Rather than supply, the direction of oil and gasoline is being dictated by the dollar.

The U.S. dollar index, where the U.S. currency is measured against other major currencies, hit a 14-month low Tuesday. Because crude is bought and sold in dollars, it essentially becomes cheaper for international investors who have flooded into energy markets.

Benchmark crude for November delivery gained 88 cents to settle at $74.15 on the New York Mercantile Exchange. At one point, prices reached $74.47, just short of the $75 reached on Aug. 25, when the driving season was still in full swing.

Natural gas has seen the same huge build up as factories shut down and major energy users cut back. Unlike crude, however natural gas is not bought and sold only in dollars. Natural gas prices tumbled 29.2 cents, nearly 6 percent, to $4.588 per 1,000 cubic feet on Nymex.

The lack of demand for gasoline is keeping prices at the pump comfortably low. The refiners that make gasoline are shutting down facilities so that they don’t overproduce and send prices falling even further.

On Tuesday, a SpendingPulse report by MasterCard showed that American motorists consumed 2.4 percent less gas during the week ended Friday.

Those numbers could be affected by the holiday weekend, however.

MasterCard’s report is based on aggregate sales activity in the MasterCard payments network, coupled with estimates for all other payment forms, including cash and check.

The average price for a gallon of regular gasoline fell less than a cent overnight to $2.478, according to auto club AAA, Wright Express and Oil Price Information Service. That’s nearly 73 cents less than gas cost at this time last year.

The last time gas cost less at this time of the year was in 2006.

On Tuesday, OPEC said China and other developing countries would push global oil demand up slightly next year, but added that any recovery would be “slow and weak.”

The Organization of the Petroleum Exporting Countries supplies over 35 percent of the world’s crude.

In other Nymex trading, heating oil rose almost 3 cents to settle at $1.9234 a gallon, and gasoline for November delivery gained about 3.3 cents to settle at $1.8318 a gallon.

In London, Brent crude rose $1.04 to settle at $72.40 on the ICE Futures exchange.

Associated Press Writers Alex Kennedy in Singapore, Pablo Gorondi in Budapest, Hungary contributed to this report.