Oil Prices Climb Back Up to Nearly $30 Per Barrel

Oil prices rose to nearly $30 per barrel Wednesday as traders began buying in response to Iraqi leader Saddam Hussein’s televised call for an Arab holy war against the West.

Light sweet crude for October delivery rose 65 cents to close at $29.77 per barrel on the New York Mercantile Exchange. The price rose as high as $29.89 before falling back.

“It was full of religious fanaticism, and I think people kind of got nervous and started bidding the market back up,” said Brian Tagler, a broker with Shearson Lehman Bros. Inc.

“We’re getting close to that $30 mark, and it looks like people might want to get up there and test that $30 area,” he said.

Traders also said prices were partially keeping pace with a bullish oil market in Europe.

Other petroleum futures were mixed.

Unleaded gasoline dropped 2.25 to 92.27 cents a gallon for October delivery. Speculators were either taking profits from the previous day’s jump or selling gasoline so they could buy more crude, said Randall Rothenberg, a broker with Dean Witter Reynolds Inc.

Later contract months for gasoline were up.

Home heating oil for October rose 0.98 cent to 83.37 cents a gallon, while later months also were up. Natural gas was up to $1.514 per 1,000 cubic feet, compared to Tuesday’s close of $1.510.

Traders said Wednesday’s rise in oil prices was partly attributable to speculation on Wall Street that the American Petroleum Institute on Wednesday would report a decline in the nation’s stockpiles of crude.

The API report, which is released after the markets close, said crude stocks for the week ending Aug. 31 were at 372.2 million barrels, down from 376.6 million barrels a week earlier but up from 335.8 million barrels a year earlier.

Crude imports were up to 6.8 million barrels a day, compared to 6.6 million barrels a week earlier and 6.4 million barrels a year earlier, API said.

Crude stocks were down because companies were drawing on their supplies, Tagler said.

The stockpile of gasoline was virtually unchanged for the week at 210.5 million barrels. Imports stood at 192,000 barrels, compared to 287,000 barrels a week earlier and 221,000 barrels a year earlier.

Analysts have attributed the drop in gasoline imports to supplies that were diverted to other buyers after the boycott of Iraq and Kuwait cut into the world’s refining capacity. Companies also traditionally try to avoid holding onto too much gasoline after Labor Day, considered to be the end of the peak summer driving season, an API spokesman said.

The price of gasoline dropped at the pump, the American Automobile Assn. reported Wednesday. The nationwide average price for a gallon of self-serve unleaded regular was $1.273, down 3.4 cents from a week earlier, the AAA said.

The retail pump price remained about 19.8 cents higher than on Aug. 1, the day before Iraq invaded Kuwait, the AAA said.

A spokesman for the Service Station Dealers of America said the decrease was attributable to lower prices charged by gasoline suppliers.