Oil again settles above $145 a barrel

Light, sweet crude for August delivery gained 10 cents to settle at $145.18 a barrel on the New York Mercantile Exchange--just over a dime short of the all-time settlement high. Earlier, the contract dipped as low as $142.49 and rose as high as $146.37.

"There's a bit of a tug of war going on," said Addison Armstrong, director of market research at Tradition Energy in Stamford, Conn. "You've got some people in here trying to buy the dips a little bit ... but we're kind of stuck trading inside of Friday's range," when prices gyrated by nearly $6 and set a new trading record of $147.27.

At the gas pump, prices hit a new U.S. record just a tenth of a penny shy of $4.11 a gallon, according to auto club AAA, the Oil Price Information Service and Wright Express. Retail diesel prices are also at an all-time high, of $4.824 a gallon.

Monday's oil price swings came as President Bush lifted an executive ban on offshore oil drilling. That alone will not loosen tight global supplies in the short term because a Congressional prohibition remains in place and any new wells would take years to complete.

However, prices might pull back were Congress to end its own ban, said Phil Flynn, analyst at Alaron Trading Corp. in Chicago.

"It would send a signal to the market that the U.S. is serious about producing oil. Over time, prices would come down," Flynn said.

The dollar advanced marginally against the euro and yen, but fell against the pound and the Swiss franc. Investors have been buying dollar-denominated crude contracts as a hedge against inflation and a weakening dollar, pushing the price of oil to about double in the past year. When the dollar strengthens, such currency-related buying often unwinds.

"We believe that in light of the dollar reversal, energy bulls could find things rather difficult on the upside, at least during the early part of the week," Edward Meir, an analyst at MF Global, said in a research note.

Geopolitical concerns continued to support oil prices.