NEW YORK (AP) - Oil and gasoline prices bounced back from an early slump Monday, closing higher as traders shifted their focus to the tightness of U.S. gasoline supplies and away from housing trends and concerns about economic growth.

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Meanwhile, oil prices added to the gains logged at the end of last week. Light, sweet crude for October delivery rose 88 cents a barrel to settle at $71.97 the Nymex, after rising more than $1.80 Thursday and Friday of last week. September gasoline futures, which expire later this week, rose 5.79 cents to $2.0393 a gallon.

'The last hurrah for gasoline demand will be the next week or two,' said Michael Waldron, energy market analyst at Lehman Brothers. (NYSE:LEH) 'Seasonally, gasoline demand pares off after Labor Day.'
U.S. gasoline stocks plunged by 5.7 million barrels in the week ended Aug. 17 to the lowest level since mid-May, according to last week's Energy Information Administration report. On average, analysts surveyed by Dow Jones Newswires expect this week's EIA report, due out Wednesday, to show gasoline inventories shrinking by another 1.8 million barrels.

Traders continue to weigh the potential impact of a mid-August fire that hit Chevron Corp.'s (NYSE:CVX) Pascagoula, Miss., refinery and has hindered production. Chevron spokeswoman Stephanie Price said in an email late Friday that while the company plans to repair the damaged equipment, 'it would be inappropriate to speculate about the extent of repairs or how long particular units will remain offline.'
At the same time, credit market sentiment continues to be shaky, and many funds holding long positions in crude oil, natural gas and petroleum products have pulled out of the market in recent weeks. Waldron said that liquidation related to losses from the credit arena has 'cast a bearish uncertainty, but this is balanced against some pretty strong supply and demand fundamentals in crude oil.'