The economic news was a little better on Tuesday but not enough to keep
oil prices from dropping again.

Benchmark crude for October delivery lost $2.13 at $72.57 a barrel in
afternoon trading on the New York Mercantile Exchange.

The national average for a gallon of unleaded regular gasoline on Tuesday
was $2.677 a gallon, according to AAA, Wright Express and Oil Price
Information Service. That's about half a cent less than a month ago and
6.7 cents higher than a year ago.

The Conference Board said its Consumer Confidence Index now stands
at 53.5, up from 51.0 in July. Still, consumer confidence is far below the
90 reading that would indicate a healthy economy.

In addition, the Standard & Poor's/Case-Shiller 20-city home price index
rose 1 percent in June from May and 4.2 percent from a year ago. However,
home prices are expected to fall for the rest of the year.

Stocks got a little boost from the economic news. The Dow Jones
Industrial Average was up about 15 points in early afternoon. The NASDAQ
and the S&P 500 were little changed. Traders have kept an eye on stocks
for signs about the direction of the economic recovery.

"Oil continues to spend much of its time trailing the stock market," 
analysts at Ritterbusch and Associates said in a report.

Many traders are awaiting August's unemployment data, due Friday,
to get a better handle on the economy as well.

"Every bit of news will bump the market in one or the other direction," 
said Michael Lynch, president of Strategic Energy & Economic 
Research in Winchester, Mass.

Energy prices also pulled back after Hurricane Earl turned toward the
East Coast of the U.S. and away from oil and gas operations in the
Gulf of Mexico. Big storms rolling through the Gulf can interrupt production
and raise prices.

"Some of that premium is being taken out of the market," Lind-Waldock
senior market analyst Rich Ilczyszyn said.

The Energy Department releases its weekly report on petroleum supplies
on Wednesday. Analysts expect it to show that crude oil inventories
continue to expand because of weak demand.

In other Nymex trading in September contracts, heating oil fell 3.27 
cents to $1.9925 a gallon and gasoline slid by 4.71 cents to $1.8870 a gallon. 
Natural gas for October delivery slipped 0.8 cent to $3.804 per 1,000 cubic feet.

In London, Brent crude was down $1.82 cents at $74.78 a barrel on the
ICE Futures exchange.

Associated Press writers Pablo Gorondi and Alex Kennedy in Singapore
contributed to this report.


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