At the pump, meanwhile, retail gas prices rose closer to record levels, while diesel prices extended their slide.

In Iraq, a key oil export pipeline that was bombed Thursday was repaired Friday, Dow Jones Newswires reported. Word of the explosion had raised concerns that Iraqi exports would fall sharply and sent oil prices surging higher.

Meanwhile, the dollar strengthened against the euro, making oil and other commodities less appealing as a hedge against inflation. A stronger dollar also makes oil more expensive to overseas investors.

Light, sweet crude for May delivery fell $1.96 to settle at $105.62 a barrel Friday on the New York Mercantile Exchange. Over the previous three days, oil prices rose $6.72, or 6.6 percent.

"We've had a big price increase, and I think traders (were) looking for excuses to take profits," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.

Concerns about the economy also weighed on futures. The Commerce Department said consumer spending edged up by just 0.1 percent last month, the poorest showing since September 2006. Energy investors worry that a cooling economy will use less fuel.

Analysts are split on oil's direction. Many think prices will rise to new records in coming months as the dollar resumes its decline. The Federal Reserve is expected to cut interest rates several more times this year, and lower interest rates tend to weaken the dollar. Many analysts say the weaker dollar has been largely responsible for oil's run to a record near $112 last week.

Other analysts argue that such high prices can't be justified in an environment in which supplies are rising and demand is falling. Several forecasters have cut oil demand growth predictions for this year, and demand for gasoline has fallen for nine straight weeks. Domestic supplies, meanwhile, have mostly risen in recent weeks.

"The price of oil still is out of whack with normal supply and demand fundamentals," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago, in a research note.

At the pump, gas prices rose 0.8 cent overnight to a national average of $3.275 a gallon, according to AAA and the Oil Price Information Service. That's just a cent shy of a record set less than two weeks ago. Retail gas prices, which tend to lag the futures market, have followed oil higher in recent days.

Diesel, on the other hand, slipped 0.4 cent overnight to a national average of $4.018 a gallon. Diesel prices have ebbed slightly in recent days; some analysts think prices have peaked for the year since demand is declining in Europe, which is particularly dependent on the fuel.

The high prices of both fuels are weighing on consumers already feeling the effects of falling home values, tight credit and high food prices. In fact, diesel, which is used to transport most of the world's consumer products, industrial materials and food, is a large part of the reason food prices are rising and that retail sales are struggling.

Other energy futures on the Nymex were mixed Friday. April heating oil futures fell 4.33 cents to settle at $3.105 a gallon while April gasoline futures edged 0.07 cent higher to settle at $2.717 a gallon.

May natural gas futures rose 11.3 cents to settle at $9.80 per 1,000 cubic feet.

Brent crude futures slipped $1.23 to settle at $103.77 a barrel on the ICE Futures exchange in London.

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