Oil prices fell Friday by almost $5 a barrel to $115.20, a trend that's triggering a sudden boom in stock prices.

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WASHINGTON — Oil prices fell Friday by almost $5 a barrel to $115.20 and are down more than 20 percent from their early July record high of more than $147, a trend that’s triggering a sudden boom in stock prices and giving the U.S. economy its best news in months.

Energy analysts cautiously believe that oil’s recent price surge finally may be reversing for good, as a weakening global economy and a strengthening dollar take the shine off oil as an investment.

The falling price of oil — and gasoline prices, too — should lower inflation and lending rates, boost consumer confidence and could even influence whom voters chose in November’s presidential election.

The Dow Jones industrial average closed up 302.89, or 2.7 percent, at 11,734.32.

Boeing, one of the 30 Dow stocks, soared $3.17, or 5 percent, to close at $67.86. Microsoft, also a Dow stock, rose 74 cents to $28.13.

Broader indicators also rose. The Standard & Poor’s 500 index was up 30.25, or 2.4 percent, at 1,296.32, and the Nasdaq composite index advanced 58.37, or 2.5 percent, to 2,414.10.

For motorists, it could mean oil prices under $100 a barrel later this year and deeper price declines at the gasoline pump. Already, the national average for a gallon of gasoline, which stood at $4.10 a month ago, was down to $3.83 Friday, according to the AAA Motor Club.

In the week of March 14-20, when oil traded just above $99 a barrel, the national average price of gasoline was $3.27. Analysts think gasoline prices could go under $3.50 a gallon by Labor Day and fall to March prices by late this year.

“It’s tough to call one week a trend … but we feel a little more comfortable in saying there is a developing trend coming. We believe that we’ve seen the top of oil prices,” said James Crandell, an energy analyst with the Wall Street investment bank Lehman Brothers.

If oil and gasoline continue to retreat, that’s likely to boost personal consumption, which rose a tepid 0.6 percent in June and didn’t keep pace with rising prices.

“What this really means is it has a big impact on people’s sentiment, on how it’s going to affect the consumer,” said James Paulsen, chief investment strategist for Wells Capital Management, a subsidiary of Wells Fargo Bank.

Pointing to rising share prices for retail stocks, Paulsen said it reflects “that sentiment that if gas prices come down, maybe the consumer won’t die as we thought.”

Oil’s fall is all the more stunning given current affairs. Russia, the world’s second-biggest oil producer, invaded its neighbor Georgia on Friday. The United States and Europe are poised to impose more economic sanctions on oil-rich Iran. And a pipeline in volatile Central Asia that carries vital global oil supplies exploded this week.

A few months ago, any of these scenarios could have sent oil beyond $150 a barrel. Instead, traders shrugged off geopolitical developments Friday as oil prices retreated another $4.82 per barrel on the New York Mercantile Exchange.

What gives? Weren’t geopolitical risks the alleged reason why oil traders were demanding a so-called fear premium, a price cushion above what normally would be determined by supply and demand?

“The fundamentals are coming into play for oil, and they are terrible,” explained Phil Flynn, a commodities expert at Alaron Trading in Chicago.

The rest of the world was wrongly thought to be immune to the U.S. financial crisis, he said, and now evidence of economic slowdown in Asia and Europe has reduced projected demand for oil.

Another important factor in oil’s fall has been a rally by the U.S. dollar. It closed the week up 4 percent against the euro, the currency of the European Union. The dollar has gained about 7 percent since its record low last month against the euro of $1.6040. Oil is priced globally in dollars, so a stronger dollar drives down oil prices.

While oil’s fall is good news to motorists, the cause of its decline — falling demand as the global economy weakens — may make falling gasoline prices a Pyrrhic victory. A sluggish global economy would cut demand for U.S. exports, which have offset the impact of the housing and banking crisis and kept the U.S. economy out of recession.

“That was the last engine supporting growth,” Reinhart said.