Pat Sullivan, Associated Press
This plant in Deer Park, Texas, might receive more oil to process, but that isn't expected to stop the rising costs of oil and gas.<BR>

NEW YORK — Crude oil futures swung wildly on Monday, rising to a record and then tumbling as investors wrestled with whether they should put stock in Saudi Arabia's promise to boost production.

Retail gas prices rose to a record $4.08 a gallon. In Utah, the average price for regular unleaded gas reached a state record of 4.03 per gallon.

Light, sweet crude for July delivery fell 25 cents to settle at $134.61 a barrel on the New York Mercantile Exchange after earlier soaring to a trading record of $139.89. Earlier, the oil futures dropped as low as $132.84.

With little in the way of news to explain oil's turnabout, analysts pointed to Saudi Arabia's weekend decision to boost production and to today's expiration of crude options, which are agreements to buy or sell futures at higher or lower prices.

Trading is often volatile in the days immediately preceding options expiration. "That could be the cause of some of the volatility today," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and

Saudi Arabia, the world's largest oil producer, told U.N. chief Ban Ki-moon over the weekend that it would boost oil output by 200,000 barrels a day, or by 2 percent, from June to July. In May, the kingdom raised production by 300,000 barrels a day.

A sense that the Saudis may be getting serious about boosting output could be growing among some investors. Still, many analysts believe the boost in Saudi output is too little to make much difference.

"Saudi Arabia's proposed output addition will only go some way in offsetting the significant output losses in other OPEC nations like Nigeria," Barclays Capital analyst Kevin Norrish said in a research note.

Cordier said Saudi Arabia has "to increase by north of 1 million barrels per day" to have an impact on prices, "and the market doesn't think they have it."

According to the International Energy Agency, OPEC spare capacity fell below 2 million barrels a day in May for the first time since 2006. The majority of that — about 1.45 million barrels a day — was in Saudi Arabia.

Earlier Monday, prices rose as the dollar fell against the euro. Many investors buy commodities such as oil as a hedge against inflation when the dollar falls. Also, a weaker dollar makes oil less expensive to investors dealing in other currencies. Many analysts believe the dollar's protracted decline is a major factor behind oil's doubling in price over the past year.

Investors were also mulling the effects of an overnight fire at a StatoilHydro ASA drilling rig in the North Sea, which could affect as much as 150,000 barrels of daily oil production, said Addison Armstrong, director of market research at Tradition Energy in Stamford, Conn., in a research note.

At the pump, meanwhile, the national average price of a gallon of gas rose 0.3 cent overnight to its latest milestone, according to AAA and the Oil Price Information Service. Gas prices are following crude prices higher and likely have several more cents to rise before catching up with oil's latest advance.

If oil prices pass $140 and head even higher, the pain consumers are feeling at the pump will intensify.

Diesel fuel prices held steady Monday at a record $4.797 a gallon. High prices for diesel, used to transport most of the world's food, are pushing food prices higher, putting even more pressure on consumers.