Will oil prices continue to stay high?

It also makes commodities less expensive for buyers operating in other currencies. Many investors see the dollar only heading lower if the Federal Reserve keeps cutting interest rates, which most analysts still expect it to do next week.

Some market watchers say oil will probably keep rising until demand falls off, which they describe as the market's way of finding fair value for the commodity. For oil, some estimate that price as low as $60 or $70 a barrel.

"The fundamentals don't justify anywhere near these prices, even when you factor in geopolitical problems," said Michael Lynch, president of Strategic Energy & Economic Research Inc. in Cambridge, Mass.

He expects prices to fall as low as $80 this year and perhaps as low as $50 in the next three or four years as more global supply comes on line.

Demand already has begun to wane in the U.S., where fuel prices are causing turmoil in an economy already saddled with recession fears, a housing and credit crisis, and dismal retail sales.

Drivers have begun to cut back on gasoline consumption. Some people have taken to riding bikes to work or organizing car pools. The sale of gas-electric hybrid vehicles is up. Larger trucks and sport utility vehicles are selling slowly.

It's unclear how much a drop in oil prices could reduce gasoline prices. The prices do not always move together because they are subject to separate supply and demand forces. While oil prices have risen 80 percent in a year, gas prices climbed only 24 percent.

Trying to predict where prices are headed has devolved into a guessing game, some analysts said.

Two weeks ago, the Energy Department acknowledged "significant uncertainty" in its oil price projections, noting the threat of supply disruptions in oil-producing nations, unusual weather or refinery outages.

The major oil companies began reporting earnings for the first three months of the year this week, with ConocoPhillips saying it earned more than $4 billion, up 17 percent from a year ago. Exxon Mobil Corp. and Chevron Corp. are scheduled to report earnings Thursday and Friday.

The higher prices have allowed companies to extract oil from sources too expensive to tap only a few years ago, like the Canadian oil sands and deepwater sites in the Gulf of Mexico, said Gary Adams, who heads the U.S. oil and gas practice for Deloitte & Touche USA LLP. He expects the price of oil to settle at around $90 to $100 a barrel in the coming months.

Even if oil prices fall back to $60 or $70 a barrel, "the capacity of those businesses to do well and fund major projects will continue," said analyst Bernard Picchi of securities firm Wall Street Access. "These are great storehouses of value, and I don't think anyone can take that from them right now."

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