Oil prices, meanwhile, fluctuated Thursday after setting a new record of $135.09 in overnight trading. A stronger dollar gave some investors reason to sell oil futures to lock in profits from crude's record run. But concerns about falling supplies and rising demand are expected to keep propelling prices higher in the days and weeks to come.

Oil's surge is contributing directly to the pain consumers feel every time they fill up. At the pump, the average national price of a gallon of regular gas rose 2.4 cents overnight to $3.831, according to a survey of stations by AAA and the Oil Price Information Service. Prices are 61 cents higher than a year ago.

Unlike last year, oil prices are setting new record highs on a daily basis. That's pushing gas prices higher, and analysts see no reason for gas not to follow.

"We're going to blast past $4," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.

Prices may rise as high as $3.90 on a national basis by this weekend, he said. Prices are already above $4 a gallon at many stations around the country, and are averaging more than $4 in California, New York and Illinois, among other states.

Oil prices rose to $135.09 a barrel in overnight electronic trading on the New York Mercantile Exchange before retreating to trade down $1.11 at $132.06 a barrel by afternoon in New York.

Analysts said oil futures are caught between the supply and demand concerns that boosted crude to its latest record, and a desire by some investors to cash in some profits. The dollar, one of the factors that has fed oil's rally from about $65 a year ago, strengthened against the euro Thursday. When the greenback gains ground, commodities such as oil lose their value as hedges against inflation. Also, a stronger dollar makes oil more expensive to investors overseas.

Analysts viewed oil's decline as temporary. The Paris-based International Energy Agency on Thursday said it is worried about whether there is enough oil to meet global demand, and is working on a review of the world's 400 largest oil fields that could lead to a major revision in its closely-watched forecasts.

"The market is really structurally tight ... oil demand is not growing that fast but supply is constrained," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

Some analysts say crude has been boosted in recent days by especially strong demand for diesel in China, where power plants in some areas are running desperately short of coal after last week's earthquake, Kevin Norrish, an analyst with Barclays Capital PLC, said new data from China shows demand for diesel was already rising quickly before the disaster. Chinese diesel imports rose 9.2 percent in April compared to last year, Norrish wrote.

Still, many analysts argue that oil prices have risen far beyond levels that can be justified by supply and demand. This school of thought believes the dollar's decline has attracted speculators to oil and other commodities, artificially inflating prices. Some analysts see signs in the prices differences between the current July crude contract and contracts for delivery in future months that could mean oil prices are set to decline in coming months.

In other Nymex trading Thursday, June heating oil futures rose 3.18 cents to $3.9402 a gallon after earlier rising to a record $4.0153. Heating oil, which is closely related to diesel, is often traded as a proxy for diesel.

June gasoline futures fell 4.41 cents to $3.3524 a gallon, and June natural gas futures rose 18.1 cents to $11.821 per 1,000 cubic feet. The Energy Department said natural gas inventories rose last week by 85 billion cubic feet, in line with analyst estimates.

In London, July Brent crude futures fell 81 cents to $131.89 on the ICE Futures Exchange.

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Associated Press Writer Pablo Gorondi in Budapest and AP Business Writer Thomas Hogue in Bangkok, Thailand, contributed to this report.