Have pump prices peaked?

    NEW YORK  _ Retail gas prices fell slightly Friday _ the
first time in 18 days they haven't risen to a new record _ and
analysts say pump prices may be peaking for the year.  Oil futures, meanwhile, soared after Turkish airstrikes on Kurdish rebel bases
in Iraq injected some supply concerns into the market and the Labor
Department's employment report gave investors reason to be
optimistic about the economy.
    The national average price of a gallon of regular gas fell 0.1
cent overnight to $3.622, according to a survey of gas stations by
AAA and the Oil Price Information Service. That's the first time
since April 14 that retail prices have fallen. Diesel prices fell
0.2 cent to a national average of $4.249 a gallon.
    ``It could go up just a little bit more,'' said Fred Rozell,
retail pricing director at the Oil Price Information Service, in
Wall, N.J., but, ``I think it's running out of steam.''
    Prices could reach $3.70 a gallon, ``at the most,'' Rozell said,
but are highly unlikely to rise to $4 on a national basis. Still,
motorists in parts of states such as California and Hawaii are
paying $4 right now.
    Soaring gas prices are cutting demand for gasoline, and analysts
have long theorized that falling demand will eventually force
prices lower. However, gas prices bucked those forecasts for most
of the spring and followed oil's sharp gains.
    On Friday, light, sweet crude for June delivery rose $3.80 to
settle at $116.32 a barrel on the New York Mercantile Exchange.
Turkish warplanes bombed Kurdish rebel bases inside Iraq for three
hours overnight, a rebel spokesman said Friday. When conflict
breaks out in the Middle East, investors often buy on concerns that
supplies will be disrupted.
    Some investors were also buying crude on a view that the economy
is improving, analysts said. The Labor Department said employers
cut far fewer jobs in April than expected.
    ``If the jobs (situation) isn't as bad, maybe we'd see a snap
back in demand,'' said Phil Flynn, an analyst at Alaron Trading
Corp. in Chicago.
    For a change, investors shrugged off the dollar, which rose on a
theory that the employment data means the Federal Reserve is less
likely to cut interest rates further this year; falling rates tend
to weaken the dollar.
    A rising dollar undercuts the appeal of commodities such as oil
as a hedge against inflation, and makes oil more expensive to
investors overseas. The rising greenback helped pull oil prices
back to nearly $110 a barrel on Thursday. Oil's climb to almost
$120 on Monday from about $64 a year ago was largely due to a
protracted decline by the dollar, analysts say.
    However, oil's connection to the dollar can be broken when other
factors predominate, as they did Friday.
    ``It's not a perfect relationship, and on any given day, oil
will choose to go its own way,'' said Jim Ritterbusch, president of
energy consultancy Ritterbusch and Associates in Galena, Ill.
    Still, analysts think the market's decision to shrug off
Friday's stronger dollar will be short lived, particularly if the
Fed holds interest rates steady and the dollar continues to gain.
    ``It will be difficult to sustain (oil price) rallies in the
face of any further strength in the dollar,'' Ritterbusch said.
    And that means retail gas prices will likely rise no higher than
$3.65 to $3.70 a gallon, before falling back toward $3 a gallon
over the summer, he said.
    In other Nymex trading Friday, June gasoline futures rose 8.82
cents to settle at $2.9664 a gallon, and June heating oil futures
rose 10.10 cents to settle at $3.2187 a gallon. June natural gas
futures rose 21.6 cents to settle at $10.777 per 1,000 cubic feet.
    In London, June Brent crude futures gained $4.06 to settle at
$114.56 a barrel on the ICE Futures exchange.