Oil sets record near $128; pump price at high, too

And traders were equally unimpressed by the U.S. government's plan to stop adding to the Strategic Petroleum Reserve.

One day, two moves designed to allay concerns about an overheated oil market that's squeezing motorists and inflating the prices of all sorts of goods.

The response in the oil trading pits? Traders did what they've been doing for months now, and pushed crude oil and gasoline futures to new highs.

"All in all, we're seeing another strong move here on little fundamental news," said Jim Ritterbusch, president of Ritterbusch & Associates, an oil trading advisory firm in Galena, Ill.

The reason for the disconnect has little to do with political decisions in Washington or Riyadh, and everything to do with market expectations. The Saudi production increase was seen in the market as minuscule, and no one expected the suspension of shipments to the U.S. government's Strategic Petroleum Reserve to have much impact on supplies.

Even more important, the traders placing the bets expect prices to just keep moving higher.

Goldman Sachs, one of the world's most influential investment banks, underscored that sentiment Friday when it hiked its oil price forecast for the second half of the year to $141 a barrel, up from $107 previously. Analysts at the bank argue that the oil market is undergoing a "structural repricing" that will continue to play out for some time to come.

"We would view any pullback in oil, regardless of the size or duration -although a correction could be as large as 15 percent -as an opportunity to re-establish long positions in oil before the summer," Goldman Sachs advised traders.

Translation: Buy when barrels go on sale, because prices are bound to keep heading higher.