Oil rebounded Tuesday in Asia on a weaker dollar and renewed buying interest after prices plunged nearly $4 in the previous session.

Monday’s sharp drop was driven by easing concerns over potential supply disruptions but analysts warned the pullback was likely to be fleeting.

“The plunge is really a temporary bull correction and is viewed by the market as a buying opportunity,” said Victor Shum, an analyst with Purvin & Gertz in Singapore. “We are also seeing the U.S. dollar easing a bit this morning and that has helped support oil pricing.”

Midday in Singapore, light, sweet crude for August delivery was up 88 cents at $142.25 a barrel in electronic trade on the New York Mercantile Exchange. The contract fell $3.92, or about 2.7 percent, to settle at $141.37 in New York on Monday.

Oil hit a trading record of $145.85 on Thursday before settling at a record close of $145.29 a barrel. There was no floor trade in the U.S. on Friday due to the July Fourth holiday.

Fears that fresh conflict in the Middle East could cut oil supplies eased over the weekend after Iran gave an undisclosed response to an international offer of incentives if it suspends a central part of its nuclear program.

But Shum said the conflict isn’t over.

President Mahmoud Ahmadinejad has insisted Iran would not bow to pressure to halt uranium enrichment, even though Tehran indicated willingness to open talks. World powers fear that Iran could use the uranium to build nuclear weapons.

“There are mixed signals and the Iran situation has certainly not been resolved,” Shum said.

Ahmadinejad told Malaysian media during a visit to Kuala Lumpur on Monday that all nations should be able to use nuclear energy without any restrictions, stressing that it would provide them with a cheap alternative to crude oil.

Iranian state media reported that the European Union policy chief Javier Solana and Iran’s top nuclear negotiator Saeed Jalili would hold talks in the second half of July.

In Asian currency trade, the dollar was weaker against the euro and yen compared with values seen midafternoon Monday in Europe. The euro was holding at around $1.57, while the dollar was buying about 107 yen.

A falling dollar has helped boost oil prices around 50 percent this year as investors often buy commodities such as oil as a hedge against inflation when the greenback weakens. Also, a struggling dollar makes oil less expensive to investors overseas.

In the U.S., retail fuel prices edged even higher and are likely to continue to rise.

Americans are now paying more than $1 billion more for gasoline per day than they did five years ago, according to a report Monday by the AAA automobile club, the Oil Price Information Service and Wright Express.

In June, the world’s largest oil consumer spent about $47.38 billion on the motor fuel _ nearly three times as much as in the same month in 2003.

In other Nymex trade, heating oil futures rose 2.39 cents to $3.9935 a gallon (3.8 liters) while gasoline futures added 2.23 cents to $3.505 a gallon. Natural gas futures fell 1.9 cents to $12.958 per 1,000 cubic feet.

August Brent crude rose 84 cents to $142.71 barrel on the ICE Futures exchange in London.