Oil settles above $70 as stock markets climb

Oil prices pushed through early losses to settle above $70 a barrel Monday on the coat tails of strong equity markets and weakness in the U.S. dollar.

“It still recognizes the favorable vibes that it’s getting from the stock market, said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates.

Benchmark crude for November delivery gained 46 cents to settle at $70.41 on the New York Mercantile Exchange.

Retail gasoline prices held steady overnight at $2.461, but the average national price has dropped nearly 20 cents a gallon since mid-August as the summer driving season wound down, according to AAA, Wright Express and Oil Price Information Service. Consumers are paying about $1.06 less than they were at this time last year.

Weak economic data weighed on crude prices last week. The U.S. reported worse than expected manufacturing and jobs numbers, with the unemployment rate rising to 9.8 percent in September, the highest since 1983.

This week will feature a slew of third quarter company earnings reports that could hint at the health of the U.S. economy.

PFGBest analyst Phil Flynn said swelling U.S. crude supplies are staggering, but the dire state of the jobs market is also hitting the energy markets.

“Welcome to the jobless economic recovery that should reduce oil demand expectations even further as we look out into our future,” Flynn said in his morning report.

Federal Reserve Chairman Ben Bernanke last week said that even though the recession is technically over, the economy will feel weak for some time.

Analyst and trader Stephen Schork said he believes Bernanke.

“In other words, the residue of this recession will linger in the psyche of the American consumer — whose spending drives two-thirds of the U.S. economy — for quite some time to come,” Schork wrote in his morning report.

The oil markets also slipped on geopolitical news out of Nigeria, where a rebel leader accepted a government amnesty offer to disarm. Unrest in the country has cut its oil production by a million barrels a day, allowing Angola to overtake it as Africa’s top oil producer.

Traders will eye the first earnings for the July-to-September period, with Aluminum producer Alcoa Inc., PepsiCo Inc. and Marriott International Inc. scheduled to report this week.

In other Nymex trading, heating oil fell 0.52 cent to settle at $1.7916 a gallon. Gasoline for November delivery added 1.3 cents to settle at $1.7539 a gallon. Natural gas for November delivery gained 26.9 cents to settle at $4.987 per 1,000 cubic feet.

In London, Brent crude lost 3 cents to settle at $68.04 on the ICE Futures exchange.

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