(By Justin Sullivan, Getty Images)
NEW YORK (AP) — The government on Tuesday again raised its short-term price forecasts for crude oil and gasoline — trends that are expected to tamp down demand — as oil futures blasted to a record near $123 a barrel.

The Energy Department predicts average monthly gasoline prices should peak at $3.73 a gallon in June, an increase of 13 cents from last month's estimate. Regular-grade gasoline is expected to average $3.52 a gallon in 2008, 71 cents above last year's average.

Diesel fuel prices are projected to average $3.94 a gallon this year, up from $2.88 a gallon in 2007.

At the pump, meanwhile, the national average price of a gallon of regular gas slipped 0.1 cents overnight to $3.611, according to AAA and the Oil Price Information Service. Analysts are split over how high gas will go; while prices have slipped since May 1, leading some analysts to say gas is close to peaking, others predict the fuel will follow oil's upward surge.

"You're going to see new highs for gas prices, probably for the weekend," said James Cordier, president of Tampa, trading firms Liberty Trading Group and OptionSellers.com, who predicts an average price of $4 a gallon in the coming weeks.

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