NEW YORK — Oil prices pulled back Friday after OPEC questioned whether crude can remain so high through the rest of the year and the dollar gained against the euro. Meanwhile, U.S. filling station operators pushed average gas prices deeper into record territory.

Light, sweet crude for July delivery sank $1.27 to $135.47 on the New York Mercantile Exchange.

In its monthly market report, the Organization of Petroleum Exporting Countries said oil's recent volatility — the price for a barrel has swung back and forth in a $10 range over the past week alone — "reconfirms the view that current price levels do not reflect supply and demand realities."

Looking ahead to the second half of the year, the cartel said: "A review of the prospects ... also shows little support for prices to remain at current levels."

OPEC lowered its 2008 global demand forecast, saying it now expects demand to increase by 1.28 percent to an average of 86.9 million barrels per day, down from a previous forecast of 1.35 percent.

Oil prices have fluctuated widely since they surged nearly $11 in a single session to a trading record above $139 a week ago.

Some investors believe prices could yet push higher. Analysts call oil's current wavering "range-trading," as traders await direction from a significant move in the dollar or change in supply and demand fundamentals.

"There is no driver out there to cause prices to break out of this range yet," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "The overall market trend is still upward. There are still many supply side concerns that will continue to support prices at high levels."

A stronger dollar helped keep oil prices in check. The greenback gained against the euro after a Labor Department report showed consumer prices rose by the biggest increase since November, helping alleviate concerns that growing inflation could force shoppers to tighten their belts.

Investors who bought commodities such as oil to protect against inflation when the dollar was falling tend to sell when the greenback gains ground. Also, a stronger dollar makes oil more expensive to investors overseas.

Oil derivatives have also swung wildly, with gasoline punishing drivers at the pump.

"A pre-lunch sell-off yesterday on the NYMEX segued into a post-lunch shortcovering rally," said trader and analyst Stephen Schork in his daily Schork Report, noting that in the case of gasoline, "a 9.66 cent loss in the morning morphed into a 6.02 cent gain by the close."

Gasoline futures traded at $3.4803, down by 4.57 cents over Thursday's close.

At the gas pump, the price for an average national price for a gallon of regular rose to a record $4.066 overnight, from $4.06 a day earlier, according to AAA and the Oil Price Information Service. Diesel also set a new record, rising 0.2 cent to $4.796 a gallon.

The pain from the high cost of fuel is by no means limited to the U.S., where gas and diesel remains far lower than in Europe and some parts of Asia.

Many developing countries, which typically have far lower household incomes, hold food and fuel prices lower through subsidies. But higher commodities costs are forcing some governments to increase those subsidized prices as well, sometimes sparking protests.

In Malaysia, more than 1,000 opposition supporters marched through Kuala Lumpur Friday to protest the government's decision last week to hike retail prices 41 percent to $3.30 a gallon.

U.N. Secretary-General Ban Ki-moon said soaring food and fuel costs could pose a threat to global stability.

"Unless we properly manage this issue, this could trigger a cascade of other challenges and crises affecting not just social and economic issues, but also political and security issues," Ban said following talks in London with British Prime Minister Gordon Brown.

In other Nymex trading, July heating oil futures slipped by 4.82 cents to $3.894 a gallon, and July natural gas futures dipped by more than 16 cents to $12.636 per 1,000 cubic feet.

In London, July Brent crude lost $1.34 to sell for $134.75 on the ICE Futures exchange.