NEW YORK - Oil futures rose moderately Wednesday, coming back from earlier losses as investors were torn between concerns about falling U.S. gasoline demand and worries about overseas oil supplies.
At the pump, meanwhile, gas prices rose to a new record over US$3.94 a gallon.
At its lows of the day, oil was down nearly $3 a barrel, compounding a $3.34 drop in crude on Tuesday. Analysts said some of Wednesday's comeback might be due to technical buying, but they weren't ready to say that the rally that pushed prices over US$135 as recently as Thursday is nearing an end.
Light, sweet crude for July delivery rose 65 cents to $129.50 a barrel on the New York Mercantile Exchange, but alternated between gains and losses.
Prices have dropped sharply this week amid a growing belief that U.S. demand for gas is dropping in response to soaring prices that in some parts of the country are over $4 a gallon. The national average price of a gallon of regular gas rose 0.7 cent overnight to a new record of $3.944, according to AAA and the Oil Price Information Service.
Gas prices are likely to keep rising as long as crude prices don't collapse, analysts said. And that means prices will soon breach the psychologically important $4 level on a national basis.
"I can't see anything to stop it from going there,'' said Chip Hodge, energy portfolio manager at John Hancock Financial Securities in Boston.
A new poll by CreditCards.com added to the market's concerns that high prices are cutting American consumers' appetite for gasoline. The survey of about 1,000 people found that more than half have cut back on their driving due to high fuel prices.
The survey's findings jell with recent data from the Energy Department and Federal Highway Administration showing that American consumers are cutting back on driving, and with an AAA survey released before Memorial Day that found fewer people planned to drive over the long holiday weekend.
Data on Memorial Day weekend demand won't be available until next week.
