Unleaded gasoline prices soared to a fifth straight record high Tuesday, but the price of crude oil fell as traders reacted to what appeared to be more conciliatory rhetoric from Iraq.
"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."
Crude prices slipped as Iraqi officials were quoted as saying they were willing to negotiate a solution to the Mideast crisis. But prices inched back up after the White House said it had no plans to seek a deal while Iraqi forces remained in Kuwait.
The September contract for light sweet crude oil closed at $28.41 per barrel, 15 cents lower than Monday. But other futures prices for months through June, 1991, were all higher on the New York Mercantile Exchange. Later months were lower.
On Tuesday, the spot unleaded contract closed at a fifth record high of $1.0126, up 1.01 cent, the highest since the contract was introduced in 1984. Futures are contracts to buy or sell a quantity of oil at a later date, used often by oil producers to guarantee that they have supplies.
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.
"Everybody's trading on headlines," Byers said.
Oil markets have been chaotic since Iraq invaded its neighbor Aug. 2, pushing up prices of crude oil and gasoline over fear of supply disruptions.
Concerns about shortages have some consumers keeping their tanks full and some service stations keeping their supplies at higher levels, said Ann-Louise Hittle, a senior oil analyst with Shearson Lehman Bros. Inc.
"They're anticipating shortages down the line," Hittle said. Traders have been concerned about a lack of refinery capacity, with U.S. plants running at nearly full capacity and three modern Kuwaiti refineries taken out of the world market by the international boycott of oil from Iraq and Kuwait.
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.