Drivers beware: Oil at all-time high

NEW YORK (CNNMoney.com) -- Oil prices finished at an all-time high above $89 a barrel Thursday, while the cost of a gallon of gasoline jerked higher.

Light, sweet crude for the November contract jumped $2.07 to settle at $89.47 a barrel on the New York Mercantile Exchange, shattering the previous record of $87.61 a barrel reached two days earlier.

Gasoline prices climbed nearly two cents Thursday as crude oil finished at an all-time high above $89 a barrel.

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In after-hours electronic trading light, sweet crude for November delivery went even higher, hitting $90.02 a barrel, according to the Associated Press.

Earlier in the day, crude prices scrambled to an all-time trading high of $89.55 a barrel.

Prices at the pump have been slow to respond to rising crude prices recently, but that may be changing. On Thursday, gas prices gained nearly 2 cents to a national average of $2.79 a gallon for regular-grade gasoline, according to AAA. They are up 4 cents since Monday.

"There's almost an inevitability here now that we are going to get to $100 a barrel," said John Kilduff, an energy analyst at Man Financial in New York.

Helping to lift crude prices higher was a decline in the dollar, which fell to an all-time low versus the euro and also dipped versus the yen.

Since oil is priced in dollars, a declining greenback makes oil less expensive for consumers outside the United States, encouraging more consumption.

Wednesday's news that Turkey had authorized military action in Northern Iraq also helped prop up crude prices.

Conflict along the Turkey-Iraq border could disrupt oil supplies coming out of the region and drive crude prices even higher.

"It's just a round robin of geopolitical and macroeconomic issues," said Kilduff.

Despite the recent gains in crude prices, when adjusted for inflation, oil is still slightly cheaper than the $95 a barrel or so it would have been in the early 1980s.