Cost of oil reverses slide, trades near $79

updated 3:23 p.m. ET Nov. 16, 2009

NEW YORK - After hitting their lowest level in a month, oil prices bounced back and settled near $79 Monday on the back of a weaker dollar and rising global stock markets.

Benchmark crude for December delivery rose $2.55 to settle at $78.90 a barrel on the New York Mercantile Exchange. On Friday, the contract fell as low as $75.57, the cheapest since Oct. 15, before settling 59 cents down at $76.35.

Stock markets in Asia and Europe rose Monday after Japan reported its economy expanded at an annual rate of 4.8 percent in the third quarter. That was the second straight quarter of expansion and the biggest rise since 2007.

U.S. stock markets also were up after a new report showed retail sales rebounded more than expected in October because of a boost in auto sales.

At the same time, the euro pushed back toward the $1.50 level against the dollar.

Commodities such as oil and gold are priced in dollars so they become cheaper when the dollar falls.

Crude prices fell last week and U.S. stock markets rose as investors started to focus more on the continued weak demand for oil.

"That could be the beginning of the disconnect as the fundamentals weigh on oil," said Jim Ritterbusch of Ritterbusch and Associates.

For most of the year, oil prices surged as investors pumped money into crude contracts to protect themselves from a weaker dollar. Oil was seen as a safer bet with demand expected to rise next year as the world's economies begin to recover.

In other Nymex trading, heating oil rose 6.59 cents to settle at $2.0320 a gallon. Gasoline for December delivery gained 7.06 cents to settle at $1.9868 a gallon. Natural gas for December delivery advanced 22.2 cents to settle at $4.614 per 1,000 cubic feet.

In London, Brent crude for December delivery rose $2.45 to settle at $78.76 on the ICE Futures exchange.

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