Oil retreats after topping $99 a barrel

Prices of gasoline and oil dropped Monday, though neither commodity can be considered cheap.

And declines were small and fragile enough that news of even small shortages, or of dust-ups in countries that supply oil, could reverse things.

Nationwide average for regular grade gasoline is $3.097 a gallon, the U.S. Energy Information Administration (EIA) reported in its weekly survey Monday. That's down a barely measurable 0.2 of a cent from a week ago, and remained 85.1 cents more than a year ago.

Oil continued to flirt with $100 a barrel Monday. But after peaking at $99.11 per barrel during the day Monday, West Texas Intermediate, also known as light, sweet crude, for delivery in January closed Nymex trading in New York at $97.70. That's a 48-cent retreat from a record $98.18 Friday. It continued to slide in worldwide electronic trading afterward, and was $96.90 when the Monday electronic session ended at 5:15 p.m. ET.

Widespread suspicion that OPEC, the oil cartel, will boost production when it meets next week was cited for dropping oil prices. Oil is priced in dollars worldwide, and the U.S. dollar is weak, helping explain the extraordinarily high price of oil lately and why the OPEC expectations didn't push prices down further.

Some analysts, including Peter Beutel at Cameron Hanover, think $100 is significant because if oil can't break that price, it will signal that oil's as expensive as it's going to get. That could trigger a sell-off that would pull down oil prices and, eventually, gasoline prices.

"There's a whole camp of traders that want to see $100 oil," says James Williams at WTRG Economics.

"Recessions cause low oil prices," he says, "and the U.S. economy isn't in great shape. If we were to enter a recession, the bottom will fall out of crude."

The price of gasoline, still high by U.S. standards, could continue slipping because demand typically dwindles after Thanksgiving weekend, the last major driving holiday. Data from the Oil Price Information Service, published daily by AAA, showed a U.S. average for regular of $3.085 Monday, down just 0.1 of a cent overnight and 24.8 cents higher than a month ago.