Oil takes breather from record run
Crude prices retreat after breaking above $90 a barrel for first time ever; gas prices climb 2 cents.
NEW YORK (CNNMoney.com) -- Oil prices finished lower Friday after briefly touching an all-time high above $90 a barrel, while gasoline prices continued their week-long climb.
Light, sweet crude for the November contract settled 87 cents lower to $88.60 a barrel on the New York Mercantile Exchange after climbing as high as $90.07 a barrel earlier in the day in electronic trading.
Crude prices have finished at a record high four times over the past week, including Thursday when prices ended at a new high of $89.74 a barrel.
Gasoline prices, which are up more than 5 cents this week, climbed nearly 2 cents to a national average of $2.81 a gallon for regular-grade gasoline, according to motorist group AAA.
Higher pump prices, however, are still far below the record high of $3.22 a gallon reached in late May.
Brian Hicks, co-manager of the Global Resources Fund at U.S. Global Investors, said the recent run-up in oil prices has been driven by a combination of factors, including production cuts announced by OPEC earlier this year, financial speculators betting that crude prices will continue to climb and fears that a conflict between Turkey and Kurdish rebels in Northern Iraq could result in supply disruptions in the region.
Also helping crude prices was continued weakness in the dollar, which fell to a new all-time low versus the euro and sagged 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.
"The fundamentals do justify the increase in oil we've had over the past six weeks or so," said Hicks.
The Bush administration weighed in on Friday on record-high oil prices. A White House spokesperson said the president "certainly would like to see the price of oil lower" and for the nation to cut its dependence on foreign oil, the Associated Press reported.
With oil hovering near record highs, Hicks warned that prices at the pump, which have remained little changed in recent weeks, are likely to move higher.
"Gas prices have not responded in the same fashion here," he said. "But we think that will eventually happen."