Many analysts say oil's September rally to record levels above $83 a barrel was due in part to speculative buying by investors taking advantage of the weak dollar. The supply and demand fundamentals of the oil market simply don't support such high prices, these analysts argue.

In recent days, oil futures have fallen as the dollar has strengthened, and as investors have begun betting that oil prices have hit their highs for the year. Crude futures typically peak in October, and then begin a seasonal decline into winter.

Still, prices could jump to new records on news of a hurricane or a bullish government petroleum inventory report.

"I think we're going to see a lot of volatility over the next couple of weeks," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

Light, sweet crude for November delivery fell 19 cents Tuesday to settle at $80.05 a barrel on the New York Mercantile Exchange after falling more than $1 earlier.

November gasoline inched up 0.15 cent to settle at $1.9828 a gallon on the Nymex, while heating oil futures fell 1.84 cents to settle at $2.1623 a gallon.

November natural gas bucked the rest of the complex, rising 37.7 cents to settle at $7.427 per 1,000 cubic feet. Some analysts think investors are reacting to a storm system in the southeastern Gulf of Mexico that they believe could threaten critical gas and oil infrastructure.

"Hints of tropical activity between south Florida and the Bahamas threatens to resemble something more substantial, with tracking that would take it westward into the Gulf raising potential for development," said Kevin Norrish, an analyst with Barclays Capital PLC, in a research note.

"The system is already producing winds to near gale force in the eastern Gulf of Mexico, and has the potential to evolve into a subtropical or tropical cyclone in the central Gulf of Mexico over the next day or so as it moves to the west or west-northwest," the National Hurricane Center said on its Web site.

On the other hand, William Gray, a prominent hurricane expert at Colorado State University, downgraded his hurricane forecast for the rest of the year. Gray now thinks there will be four named storms in October and November, one of them major, a reduction of one named storm from his previous forecast.

Flynn thinks natural gas traders are focusing more on winter demand than the Florida storm system. An unexpected cold snap will test the market's consensus view that natural gas inventories are adequate, Flynn said, and many investors are betting this winter will be colder than last.

Also, Flynn argues, "if it was all about the storm, then oil would be higher, too."

At the pump, meanwhile, gas prices fell 0.2 cent overnight to a national average price of $2.788 a gallon, according to AAA and the Oil Price Information Service. Retail prices, which typically lag the futures market, have remained flat in recent weeks despite analyst predictions they would rise by 10 to 15 cents to catch up with oil's 20 percent September rally.

While keeping one eye on the dollar, futures traders are also anticipating Wednesday's inventory report from the Energy Department's Energy Information Administration. Analysts surveyed by Dow Jones Newswires expect, on average, that crude inventories fell by 400,000 barrels in the week ended Sept. 28, while gasoline inventories grew by 400,000 barrels.

Refinery use likely rose by 0.4 percentage point to 87.3 percent of capacity, while inventories of distillates, which include heating oil and diesel fuel, likely grew by 700,000 barrels.