Updated from 6:59 a.m. EDT

Oil's surge reached new heights Friday, as the near-term futures contract briefly hit $90 a barrel before pulling back.

November light, sweet crude touched $90.07 in early trading. However, buying pressure eased, and lately oil was down 57 cents on the day to $88.90. The move came a day after crude hit its latest all-time high in a string of records that has seen only an occasional interruption.

Driving the latest rally has been the falling dollar, expectations of tight supplies and uncertainty about whether violence is going to break out between Turkey's military and Iraqi kurds.

Alan Mandel, an analyst at Alan M. Trading, says the market cannot be shorted at the moment. "The momentum is still heading higher, and we'll probably see $90 next week," he says.

While the Turkish problem doesn't look like it's getting better, if tension does ease, prices could drop 5%, he predicts. At the moment, he says, traders are jittery about the situation because it will further destabilize Iraq and could affect a regional oil pipeline in the area.

The rhetoric surrounding Iran is also heating up, with Russian president Vladimir Putin saying this week that it would be a mistake for the U.S. to attack Iran.

"All eyes are now on the December West Texas intermediate contract because the November contract expires after next Monday's close," says Stephen Schork, principal with the Schork Group. "Because the curve is backwardated, the December contract is well below $90. Thus, we will either see the November contract reach $90 today or next Monday, or we retrace with the December contract."

From a technical perspective, Schork says there has been consistent support for crude in the $78 to $81 range, so the December contract could drop to that level, but then be greeted by buying interest.

"Either the support will hold at that level and buyers will propel us back to $90, or bears will break that lower support level," he says. "If that happens the buyers in the market will panic, which could send oil back into the high $60s. However, if the December contract goes back to $90, there is no reason why it won't go to $100."

Max Pyziur, an analyst with CPM Group, points out that even though the latest petroleum stores, as revealed in Wednesday's Energy Department data, showed a higher-than-expected build, traders can essentially read whatever they want into the numbers and use them as they please.

"While this is usually deemed bearish, this time around traders interpreted the figures to mean that the U.S. is preparing for increased demand for crude products in the fourth quarter and are thus building oil inventories accordingly," he says. "This is somewhat strange considering that weather forecasters are expecting a mild winter, and distillate inventories (which include heating oil) are 5% above the normal range for this time of year."

Among stocks, oil services giant Schlumberger ( SLB) posted stronger-than-expected third-quarter earnings. The gains came just a week after refiners Chevron ( CVX) and Valero ( VLO) warned of weakening refining margins.

Schlumberger was down nearly 10%, though. Exxon Mobil ( XOM) was off 1%.

Other energy contracts were lower along with oil. Reformulated gasoline was down 2 cents at $2.16 a gallon, and heating oil was losing 1 cent to $2.34 a gallon.

Natural gas was dropping 22 cents to $7.15 per million British thermal units.