Oil prices briefly rose above $80 a barrel on Tuesday as better-than-expected US corporate earnings boosted investor confidence and the dollar fell against other major currencies.
By mid-afternoon in Europe, benchmark crude for November delivery was down 14 cents at $79.47 in electronic trading on the New York Mercantile Exchange. Earlier in the session, it rose as high as $80.05 a barrel before falling back. The contract rose $1.08 to settle at $79.61 on Monday.
Crude did a chin-up over $80 a barrel for the first time this year after Apple Inc. and Texas Instruments Inc. reported third quarter earnings Monday that beat analyst forecasts. Caterpillar Inc., Coca-Cola Co. and DuPont are scheduled to report later Tuesday.
Crude demand has remained sluggish this year as the global economy recovers from recession. With the US Federal Reserve keeping interest rates at near zero per cent, investors have flocked to stocks and commodities to make money.
"This rally isn't based on fundamentals. It's about risk appetite," said Jonathan Kornafel, Asia director for market maker Hudson Capital Energy in Singapore. "Money is looking for some kind of return."
Commodities like oil and gold are bought and sold in dollars, making them cheaper and more attractive to investors when the US currency falls.
The euro rose to $1.4976 from $1.4944 late Monday in New York, while the British pound rose to $1.6447 from $1.6370.
JBC Energy in Vienna said the break above $80 was "in line with gains in equities and a dollar loss."
"However, we see little support for the rally, which is now eight days old, and think that at some point OPEC spare capacity of about 6 million barrels and massive on- and offshore stocks — to mention just a few of the bearish items — will trigger a correction phase," JBC said in a report.
In other Nymex trading, heating oil was up 0.11 cent to $2.0533 a gallon. Gasoline for November delivery lost 0.57 cent to $1.9815 a gallon. Natural gas for November delivery jumped 15.4 cents to $4.989 per 1,000 cubic feet.
In London, Brent crude for December delivery fell 4 cents to $77.73 on the ICE Futures exchange.