Gas prices jumped nearly 3 cents overnight to a new national record of nearly $3.65 a gallon Thursday, while oil prices paused from their own climb to record highs and succumbed to mild profit-taking.At the pump, the average price of a gallon of regular gas nationwide rose 2.7 cents to a record $3.645, according to a survey of stations by AAA and the Oil Price Information Service. Diesel prices also rose, adding 0.9 cent to match a record national average of $4.251 a gallon. Gas prices tend to lag oil futures, and with crude rising to a new record near $124 a barrel Wednesday and likely headed higher, it's widely expected the average price of gas will soon rise as high as $4. Motorists in many areas, including parts of California and Hawaii, are already paying that much, or more.



"If oil prices go the way that pundits are expecting, there's no way we'll stay under $4 a gallon," said Fadel Gheit, an analyst at Oppenheimer & Co. in New York.

Meanwhile, light, sweet crude for June delivery fell 12 cents to $123.41 a barrel on the New York Mercantile Exchange Thursday but alternated between gains and losses. Prices rose as high as a record $123.93 on Wednesday.

Analysts said there was little in the way of news driving Thursday's oil moves. Investors occasionally sell a little during rallies to lock in profits, Gheit said. But bullish momentum — and expectations that the dollar will continue to weaken against foreign currencies including the euro — are likely to keep pushing oil to new records, he said.

Goldman Sachs analysts recently predicted prices will rise as high as $150 to $200 a barrel within two years. That forecast has driven much of oil's gains in recent days.

Analysts at Goldman and firms such as Barclays Capital believe tight global supplies and growing demand from fast-growing economies in countries such as China and India are driving oil higher. But Gheit and analysts including Tim Evans at Citi Futures Perspective argue that supply and demand fundamentals don't support such high prices.

"There is no reason why oil prices should be above $60," Gheit said, noting that domestic crude supplies are at average levels, and that refineries are cutting gasoline production as high prices cut consumers demand for fuel. "The physical supplies do not justify the price, it just doesn't make sense."

Many analysts feel speculative investment driven by the dollar's protracted decline is the real reason behind higher prices. The dollar fell against the euro Thursday, attracting investors who view commodities such as oil as a hedge against inflation. Also, a weaker dollar makes oil cheaper to investors overseas.

Still, the market sometimes ignores the dollar, as it did Wednesday when oil surged to new records although the dollar advanced. Some analysts say that's a sign that many investors are buying on pure momentum — believing prices will head higher regardless of negative data, news or dollar movements.

"There's a lot of momentum driving the oil price up," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

In other Nymex trading, June gasoline futures rose 0.23 cent to $3.1205 a gallon and June heating oil futures rose 4.83 cents to $3.4956 a gallon. June natural gas futures rose 5.8 cents to $11.385 per 1,000 cubic feet. The Energy Department said natural gas inventories rose by 65 billion cubic feet last week, but remain slightly below the 5-year average.

In London, June Brent crude futures rose 19 cents to $122.51 a barrel on the ICE Futures exchange.

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AP Business Writers George Jahn in Vienna and Thomas Hogue in Bangkok, Thailand contributed to this report.

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