Another drop in the U.S. dollar also lured buyers.
The resurgence in crude prices not only raises the concern that $4-a-gallon gasoline is here to stay for U.S. drivers — it also means that heating homes could get significantly more expensive this winter. Heating oil futures surged on the New York Mercantile Exchange to a record of more than $4.15 a gallon, and natural gas also rose.
"If you think your gasoline bills are expensive now, wait till you get your home heating bill this winter," said Stephen Schork, an analyst and trader in Villanova, Pa.
The problem is that while U.S. consumer demand is waning as people try to save money, other factors are keeping energy costs high. Those factors include the weak dollar, refineries cutting back on production and relatively resilient demand for diesel fuel. Diesel is a distillate fuel that is produced and distributed similarly to heating oil, so diesel demand often affects the price of heating oil.
The other big reason gasoline and heating bills are likely to stay high: unrest in the Middle East and Africa.
"The bulls are still able to spin a bullish case on this — not based so much on the fundamentals, but on a lot of 'What if?' scenarios," Schork said.
Iran, which has long been under U.N. scrutiny for its uranium enrichment program, has been testing missiles this week, including a new missile capable of reaching Israel. On Thursday, Secretary of State Condoleezza Rice warned the oil-producing nation that the United States will defend its allies, and Iran responded with another missile launch. Neither the United States nor Israel has ruled out a military strike on Iran.
Traders fear the oil producing nation could block the Strait of Hormuz, through which about 40 percent of the world's tanker traffic passes.
"There's always a fear premium in pricing. The tensions in Iran and the threat of supply disruption will help support oil prices," said Jeff Brown, managing director of FACTS Global Energy in Singapore.
On Friday, light, sweet crude for August delivery soared to an all-time high of $147.27 a barrel, before pulling back slightly to trade at $146.60, up $4.94.
Crude had fallen by nearly $10 a barrel over two days at the start of the week, but rebounded by more than $5 a barrel Thursday as anxiety heightened about Middle East and Nigerian supplies being disrupted.
The Organization of Petroleum Exporting Countries warned Thursday it cannot replace the shortfall if Iran is attacked and takes its crude supplies off the market.
Also Thursday, Nigeria's main militant group said it would resume attacks in the oil-rich region because of Britain's recent vow to back the government in the conflict there. Over the past two years, attacks have lowered the nation's typical daily oil output by a quarter.
JBC Energy in Vienna, Austria, said the news about Iran and Nigeria — as well as a reported threat of a strike by oil workers in Brazil — were "enough to wake the market from its two-day slumber."
Meanwhile, the dollar weakened against other major currencies Friday. The falling dollar has been a major factor behind the surge in crude oil, which is denominated in dollars; oil's rise has not been as severe for countries with stronger currencies, and meanwhile, traders have been using commodities as a hedge against the tumbling U.S. currency.
August Brent crude rose to a new trading record of $147.50 before pulling back to trade $4.82 higher at $146.85 a barrel on the ICE Futures exchange in London.
In other Nymex trading, heating oil futures rose to a trading record of $4.1586 before retreating to $4.1457 a gallon, up 10.83 cents.
Gasoline futures also rose to a new trading record of $3.631 a gallon before easing back to $3.6140, up 10.31 cents.
The average U.S. retail price for gasoline was at $4.096 a gallon, down slightly from the record $4.108 a gallon reached on Monday, according to auto club AAA, the Oil Price Information Service and Wright Express.
Natural gas futures rose 2.7 cents to $12.329 per 1,000 cubic feet, after rising as high as $13.694.
Natural gas, because it is not a crude oil product, is inexpensive compared to heating oil. But as the winter approaches, the fuel has the potential to shoot higher as energy traders look for cheaper places to put their money, Schork said.
Heating oil is used mostly in the Northeast United States; homes in most other regions of the country use natural gas.
It's possible for people to save some money on heating, but it's not easy to slash the bill significantly.
"We've been building these ridiculous McMansions over the past few years. It's harder to trade in a McMansion than it is an SUV," Schork said. "But you can turn your thermostat down and throw on a sweater."
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