Oil is above $98 per barrel on the heels of a better-than-expected retail sales report and a broad rally on Wall Street.

The government reported Tuesday that retail sales slipped 0.2 percent last month, the first decline in nearly a year, as Americans bought fewer cars. The report still beat analysts' expectations. Stocks and oil rallied after the report came out.

Benchmark West Texas Intermediate gained 82 cents at $98.12 per barrel in morning trading on the New York Mercantile Exchange. In London, Brent crude added $1.52 at $119.94 per barrel on the ICE Futures exchange.

Gasoline pump prices dropped to $3.696 per gallon. Analysts expect the national average to fall as low as $3.50 per gallon this month.