Market analysts point to a hoard of fund-buying driving prices, as players become increasingly nervous heading into the spring and summer when the market is expected to tighten like it did in 2004. That's when New York Mercantile Exchange (Nymex) crude futures gained more than $20 to trade eventually at an all-time high of $55.67 per barrel in late October.

On the Nymex, light, sweet crude for April delivery gained 52¢ to $53.57/bbl on Thursday. The April contract had traded as high as $55.20/bbl, passing through resistance points very easily. In London on the International Petroleum Exchange, Brent crude traded at a record high of $53/bbl. The prompt-month contract gave back gains on profit taking and settled up 73¢ to $51.95/bbl, an all-time record close.

For a second straight day, Nymex gasoline futures closed at a record high. The front-month contract gained 2.37¢ to settle at $1.5075 per gallon.

The nervousness and rally were supported by comments from Opec official Adnan Shihab-Eldin of Kuwait, who said Thursday that a major supply disruption could send crude prices to $80/bbl.

"I can stress that the probability that the price of a barrel of crude rises to $80 in the near future is a low probability," Shihab-Eldin said. "However, I can't rule out the rise of a barrel of oil to $80 in the coming two years."

The growing consensus with speculators is that oil production is at or near full capacity, refineries are at or near full capacity, consumption is not expected to ease despite high oil prices, and the geopolitical world is still fragile.

"The market should hit a brick wall at some point," said Phil Flynn of Alaron Trading. "It's hard to find one single fundamental reason for these prices, but there are expectations demand is going to outstrip supply."

Still, most analysts, while admitting the supply-demand balance is rather tight, say fundamentals do not justify the market moving upward with this velocity -- in a shoulder month, nonetheless.

"It's a struggle to explain what is going on," said Simon Wardell, senior energy analyst with consultants Global Insight. "There is a growing disconnect between traditional fundamentals and current prices."

Wardell suggests there might be some underlying factor in the market moving prices that is not yet apparent.

The latest two-day rally started after the US Energy Information Administration reported builds in both gasoline and crude oil. US gasoline stocks are more than 10% higher than last year, and crude inventories are now almost 9% above the level at this time last year.

On top of hedge fund buying, increased investment in commodities by pension funds have added to oil prices. The influx of capital has accelerated recently because of the US dollar's ongoing decline. Last year alone, roughly $40 billion was invested in commodities, with more than 70% in energy.