Crude oil prices fell for a third straight day Friday, retreating further from records earlier in the week, as supply fears eased after Opec's decision to raise its output ceiling.

New York's reference light sweet crude July contract fell 79 cents a barrel to 38.49 at the close, moving down further from Tuesday's all-time record high above 42 dollars a barrel.

The decline was a sign of easing jitters in the oil futures markets in the wake of the Opec cartel's decision to boost production quotas by 2.5 million barrels per day.

New York prices have tumbled nearly four dollars in the past three days after hitting an intraday record of42.45 a barrel.

US gasoline futures on the New York Mercantile Exchange meanwhile fell 5.75 cents to 1.1779 dollars per gallon (3.78 liters).

The price of benchmark Brent North Sea crude oil for July deliv-

ery fell 73 cents per barrel to 35.67 dollars at the closing in London.

Markets tensions also were eased this week by strong US inventory figures for crude oil and gasoline going into the North American vacation season. This has helped dampen some of the speculation that has pushed up prices.

"We have ample near-term supply of both gasoline and crude," said analyst Jim Still at Refco.

"A lot of anxiety has been lifted ... and there's still heavy fund selling."

Still, there was some trepidation in the market about how much impact the Opec decision will have.

The Organization of Petroleum Exporting Countries is already pumping well over its official output ceiling of 23.5 million barrels per day (bpd).

So their agreement Thursday to raise the ceiling by 2.0 million bpd next month and by another 0.5 million bpd in August would do

little more than bring output quotas in line with actual production, analysts said.

"Opec's decision to raise quotas to 25.5 million bpd at the June 3 meeting will provide some relief but is unlikely to bring prices substantially lower," said Standard Chartered analyst Helen Henton.

"Opec is already producing in excess of the new quotas. It has sufficient capacity to meet current demand forecasts but there is little room for disruption and demand forecasts for 2004 may yet prove too low."

Fears of terrorist disruption to supplies from oil kingpin Saudi Arabia were likely to ensure prices did not fall far, market watchers said.

"With the majority of spare capacity located in Saudi Arabia, the risk is that supplies could be disrupted at a time when demand is booming and Opec is perceived to have insufficient capacity to fill the gap," Henton wrote in a research note.