NEW YORK — Oil prices fluctuated Monday, hovering above $114 a barrel as traders looked to a slightly stronger U.S. dollar for direction after the previous session's steep nosedive.

At the pump, a gallon of regular gasoline shed almost a penny overnight to a new national average of $3.681, according to auto club AAA, the Oil Price Information Service and Wright Express. Prices have fallen 10.5 percent from record highs above $4 a gallon reached July 17.

Crude began the day higher but later drifted lower after the dollar gained some ground against the euro. After a week in which tensions with Russia and concerns about tropical weather weighed on crude, oil market investors have returned to a singular focus on the dollar. A stronger dollar encourages selling from investors who bought oil and other commodities as a hedge against inflation or weakness in the U.S. currency. The 15-nation euro fell to $1.4779 in morning trading in New York.

"So goes the dollar, so goes the energy complex these days," said Stephen Schork, an analyst and oil trader in Villanova, Pa.

Light, sweet crude for September delivery fell 25 cents to $114.34 a barrel in morning trading on the New York Mercantile Exchange, but prices alternated between positive and negative territory. Trading was light heading into the Labor Day holiday next Monday, increasing the volatility that has characterized the market in recent days.

On Friday, crude fell $6.59, or 5.4 percent, to $114.59 a barrel. It was crude's largest single-day price drop in percentage terms since Dec. 27, 2004. That drop wiped out gains from an almost $6 rally on Thursday.

Analysts said the market's indifference to bullish news such as threats to energy supplies from Russia's invasion of Georgia and last week's Tropical Storm Fay suggests that crude remains in a downward trend.

"From the Caribbean to the Caspian, we've had one bullish headline after another and the market cannot generate a rally," Schork said. "It certainly doesn't bode well for anyone who owns commodities."

Still, unresolved tensions between the U.S. and Russia over the conflict in Georgia could rekindle supply worries and send prices higher.

Russia pulled the bulk of its troops and tanks out Friday under a cease-fire agreement, but built up its forces in and around South Ossetia and Abkhazia, another separatist region. They also left other military posts at locations inside Georgia proper.

A U.S. Navy destroyer loaded with humanitarian aid reached Georgia's Black Sea port of Batumi on Sunday, a move that a Russian general suggested would worsen tensions between the former Cold War foes.

A Monday vote by Russian lawmakers unanimously asking President Dmitry Medvedev to recognize the independence of Georgia's two rebel provinces added to the concerns of energy markets.

Despite the conflict, some analysts said energy flows from Russia to the West were safe.

"We continue to see little chance for oil to be used by Russia as a bargaining tool," said Olivier Jakob of Petromatrix in Switzerland. "Oil is the weapon of last resort, not of first resort ... and it would make no sense for Russia to limit exports of crude or products to European countries."

In other Nymex trading, heating oil futures rose almost a penny to $3.1396 a gallon, while gasoline prices fell 2.57 cents to $2.8412 a gallon. Natural gas futures fell 15.9 cents to $7.683 per 1,000 cubic feet.

In London, October Brent crude fell 25 cents to $113.67 on the ICE Futures exchange.

Associated Press writers Pablo Gorondi in Budapest, Hungary, Alex Kennedy in Singapore and Mansur Mirovalev in Moscow contributed to this report.