Updated from 1:20 p.m. EDT

Oil prices spiraled lower for a fifth straight session Friday, threatening the key $53-a-barrel level.

The May crude contract closed down 79 cents to $53.32 a barrel in Nymex floor trading. Gasoline futures, which have fallen even harder than oil this week, 3.5 cents at $1.536.

Lee Fader, an oil broker at ABN Amro, said earlier Friday that a close below the May crude contract's 40-day moving average of $53.75 a barrel boded poorly for bulls. The last time prices fell below the 40-day moving average was in January when oil was around $43 a barrel

Crude and gasoline also tumbled Thursday after the Energy Department said U.S. refineries were operating at 93.1% capacity in the last week of march, up from 91.1%. The same report said gasoline inventories were roughly 6% higher now than at this time last year.

The news followed a sixth straight weekly rise in crude inventories reported by the Energy Department on Wednesday. Combined, the data has forced energy bulls to confront the possibility that supply fundamentals are on the mend, even if there's no sign of waning demand heading into the summer driving season.

"Crude inventories are not tight enough to justify current prices," J.P. Morgan strategists said in a report Friday on commodity markets, pegging their estimates for spring prices at $40 a barrel.

Crude for May delivery is down almost 8% from the intraday peak of $58.28 hit on April 4.

Despite lower prices this week, a quarter-long run-up in crude and gasoline has helped most oil and gas companies to boost their cash reserves. Analysts have repeatedly said that earning guidance provided earlier this year by many companies does not reflect higher prices. Anatol Feygin, an analyst at Banc of America, named natural gas producer

Questar

(STR)

as one company that will probably report higher-than-expected earnings.

Prudential's analyst Andrew Rosenfeld said that for

Tesoro

(TSO)

, "higher realized refining margins" will boost the company's first quarter earnings compared to the fourth quarter of last year. Nevertheless, he lowered his first quarter EPS guidance to 75 cents from 80 cents a share, citing "unplanned problems" at one of its refineries.

BJ Services

(BJS)

was raised to outperform from sector-perform by analyst Kurt Hallead at RBC Capital. BJ Services is a "quasi asset intensive company," Hallead said, meaning that it provides both services and equipment to exploration and production companies. As such, he says, the company is exposed to the kind of profits offshore rig equipment providers realize, which is often 100% from quarter to quarter. It also gets the more modest 5% increases service companies realize. Hallead sees BJ Services increase its earning by 15% to 25% in the near term.

"The primary driver of earnings in the service sector is oil prices. When prices are high, oil producers cash flow increases, which is then re-invested into the company by buying more services and equipment," he said.

Another way large oil companies are utilizing their overflowing cash reserves is paying out ever-higher dividends and buying back stock.

ConocoPhillips

(COP) - Get Report

, which has seen its share price skyrocket over 20% since the beginning of January, late Thursday increased its quarterly dividend by 24% to 62 cents from 50 cents. It also declared a 2-for-1 stock split. Shares fell 37 cents, or 0.34%, to $109.98.

Shares of major oil producers were mostly down, corresponding to the drop in oil prices.

ExxonMobil

(XOM) - Get Report

lost 42 cents, or 0.69%, to $60:43;

ChevronTexaco

(CVX) - Get Report

fell 63 cents, or 1.09%, to $57.33;

Royal Dutch/Shell

(RD)

dropped 21 cents, or 0.34%, to $61.26; and

BP

(BP) - Get Report

dropped 25 cents, or 0.39% to $63.40.

One company that is shining through the red is

Lufkin Industries

(LUFK)

. The supplier of oil field power transmission and trailer products was raised to a strong buy by analyst James Rollyson at Raymond James. The company said is first quarter earnings will be between 95 cents and $1, topping Raymond James' expectation of 75 cents a share. Shares rose $6.82, or 13.98%, to $55.59.