Oil prices jumped to a new record Friday, rattling stock investors and raising the specter of another round of sticker shock at the gas pump.
Crude oil for June delivery gained $2.27 to close at $125.96 a barrel in New York trading. It reached as high as $126.20 during the day.
It was oil's sixth straight daily gain, and breaching the $125-a-barrel mark sets the stage for further gains, both in the futures pits and at the gas pump, analysts said.
"Consumers and end-users are clearly about to get hit by some of the stiffest increases in 2008 that are only now working their way through the distribution chain," Tom Kloza, chief oil analyst for the Oil Price Information Service, wrote in a report to clients, noting that crude prices have been rising much faster than gasoline prices.
Motorists are already paying record prices, AAA said in its latest report. The statewide average price for regular gasoline in California is now at $3.929 a gallon, up from $3.746 a month ago and $3.486 at this time last year, the group said.
Analysts said there were no dramatic developments behind the latest upward move in crude. But oil prices have climbed more than 30% this year and almost 12% since May 1, convincing many investors that the momentum play in crude futures shows no sign of slowing.
"We blew through 115, 120 and 125," said Andrew Lipow, a Houston energy consultant. "With that kind of price movement, people don't even want to sell anymore because they see it just keeps going up, and that kind of feeds on itself."
The speculative fever around crude has even given rise to talk on Wall Street of a new "super spike" that could push prices to $150 or even $200 a barrel.
That sort of talk is unnerving to stock investors. On Friday, the Dow Jones industrial average fell 120.90 points, or almost 1%, to 12,745.88. That brought the Dow's loss for the week to 2.4% and snapped a three-week winning streak.
The stock rally over the last few weeks was fed by generally good news, including better-than-expected jobless and earnings numbers, as well as the sense that the global financial crisis was nearing its latter stages.
But the tone has shifted this week as investors wait to see how far oil will rise and how that will affect the economy.
"The big fly in the ointment has been oil," said Keith Wirtz, chief investment officer at Fifth Third Asset Management in Cincinnati. "No one thought a year ago that oil at $60 a barrel would double. That's the main factor as to why this market may lose some steam in the near term."
