Crude oil followed the stock market up on Tuesday, settling higher for the first time in five sessions.
Investors boosted health stocks, watching a Massachusetts election to fill the seat of the late senator Edward Kennedy. Some hoped for a Republican victory that would make it more difficult for Senate Democrats to pass a health care bill. The Dow Jones Industrial Average closed up more than 100 points.
Wholesale gasoline prices also moved higher after the MasterCard SpendingPulse report for the week ended Friday showed gasoline consumption rose 3.2 per cent with the week before and 2.3 per cent from the same week a year ago. Traders have been looking for signs that gasoline demand is starting to pick up to justify oil prices that have more than doubled in the past year.
SpendingPulse is a division of MasterCard Advisers that tracks total sales paid for by credit card, cheques and cash.
But last week's falling oil prices started to bring down prices at the gas pump in the United States. Gasoline prices fell for the fourth straight day, though the declines have been modest so far.
Prices of $2.74 per gallon Tuesday were less than two pennies under the 15-month peak of $2.7543 hit on Thursday, according to AAA, Wright Express and Oil Price Information Service.
Prices still are up 15 cents in the past month and 89.8 cents from a year ago, as motorists dig deeper into their wallets to pay for fuel just as Christmas bills start to come in.
Tuesday's gasoline prices matched the Energy Information Administration survey that showed prices averaged $2.739 per gallon in the United States on Monday, down 1.2 cents from the week before.
In Canada, the price of gas averaged C$1.016 per litre, up from 96.6 cents per litre a month ago, according to price-watching website GasBuddy.com.
Gasoline prices have spiked in the past month on a jump in oil prices.
Analyst Tom Kloza said to look for larger declines in gasoline prices over the next few weeks. January and February are typically a period of poor demand for transportation fuels.
Benchmark crude for February delivery rose US$1.02 to settle at $79.02 Tuesday on the New York Mercantile Exchange.
In other Nymex trading in February contracts, heating oil fell 0.06 cent to settle at $2.0454 a gallon, while gasoline added 1.37 cents to settle at $2.0591 a gallon. Natural gas futures shed 13.4 cents to settle at $5.557 per 1,000 cubic feet.
In London, Brent crude for March delivery rose 53 cents to settle at $77.63 a barrel on the ICE Futures exchange.