Oil Prices Close Mixed After a Volatile Session

Oil prices ended mixed Tuesday after Iraqi President Saddam Hussein gave a speech that was not as hostile as traders had expected.

But prices swings were wide, and trading volatile, on continued tensions in the Persian Gulf.

After rising sharply in early trading, most prices closed just slightly higher after the Iraqi leader’s statement.

On the New York Mercantile Exchange, the benchmark U.S. crude oil, West Texas Intermediate, rose 12 cents for delivery in October to $28.71 a gallon.

But spot September oil lost 15 cents to $28.41 at barrel. Earlier, the September contract had traded as high as $29.09. Analysts said the contract’s expiration Tuesday contributed to the price swings.

Unleaded gasoline added 1.01 cents to $1.0126 a gallon, and heating oil rose 0.75 cent to 83.71 cents a gallon.

North Sea Brent crude was little changed and was quoted late in the day at $29.30 a barrel for September delivery, up 5 cents from Monday.

“The speech wasn’t as aggressive as people thought it would be,” said Tom Bentz, analyst with United Energy Inc.

“It calmed the market,” said William Byers, an oil analyst with Bear, Stearns & Co. “It calmed traders because it indicated there was another possible solution to the situation, other than military.”

Saddam said Iraq has no intention to “wage aggression against anyone, including Saudi Arabia.”

The United States has sent thousands of troops to Saudi Arabia, where officials worry about an attack by Iraq, which overran Kuwait Aug. 2.

Separately, oil industry sources in the Gulf expected the Saudis, the world’s largest oil exporters, to boost output soon to make up the shortfall caused by the international embargo against Iraq and Iraqi-occupied Kuwait.

The embargo has stripped about 4 million barrels a day from world export markets.

“We still have no confirmation that oil production has been increased,” an oil industry executive in Saudi Arabia said. “But an order (to raise output) seems to be imminent.”

Other petroleum futures were up Tuesday, as natural gas moved from $1.417 to $1.420 per 1,000 cubic feet on September contracts and wholesale home heating oil rose 0.75 cent to 83.71 cents per gallon. Tuesday was the last trading day for September petroleum contracts on the Merc.

After the markets closed, the American Petroleum Institute reported that crude oil and gasoline imports were up last week. Gasoline stocks were also higher, although crude stocks were slightly down.

The API’s weekly report said crude imports rose to 6.5 million barrels per day for the week ending Aug. 10, up from 6.2 million barrels per day a week earlier but down from 6.9 million barrels per day a year earlier. The nation’s stockpile of crude oil dipped from 375.9 million barrels to 375.7 million barrels, although it was well above the 335.2 million barrels reported a year earlier.

Gasoline stockpiles rose to 214 million barrels, up from 212.4 million barrels a week earlier but down from 223.9 million barrels a year earlier. Gasoline imports rose to 545,000 barrels per day, up from 376,000 barrels a day a week earlier and 280,000 barrels a day a year earlier.

U.S. refineries were running at 92.3% of capacity, down from 94.3% a week earlier but up from 90% a year earlier.