Oil sets new trading record above $147 a barrel

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A decline in the U.S. dollar and concerns about an oil worker strike in Brazil contributed to the higher price.

The resurgence in crude prices stokes concern that $4-a-gallon gasoline is here to stay for U.S. drivers and means home heating could get much more expensive this winter.

Heating oil futures surged on the New York Mercantile Exchange to a record of more than $4.15 a gallon. Natural gas futures turned lower, but are still about twice as high as a year ago.

"If you think your gasoline bills are expensive now, wait till you get your home heating bill this winter," said Stephen Schork, an analyst and trader in Villanova, Pa.

While U.S. consumer demand for gasoline is waning as people try to save money, other factors are keeping energy costs high: The weak dollar, refineries cutting back on production and resilient demand for diesel fuel. Diesel is a distillate fuel produced and distributed similarly to heating oil, so diesel demand often affects the price of heating oil.

The other big reason gasoline and heating bills are likely to stay high is unrest in the Middle East and Africa.

"The bulls are still able to spin a bullish case on this not based so much on the fundamentals, but on a lot of 'What if?' scenarios," Schork said.

Iran, which has long been under U.N. scrutiny for its uranium enrichment program, has been testing missiles this week, including a new missile capable of reaching Israel. On Thursday, Secretary of State Condoleezza Rice warned the oil-producing nation that the United States will defend its allies, and Iran responded with another missile launch. Neither the United States nor Israel has ruled out a military strike on Iran.

On Friday, there were rumors of Israeli military exercises taking place in Iraqi airspace, which were reportedly denied by Israeli officials.

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