Oil Prices Plunge $1.39 a Barrel as Traders Cash In

Oil prices plunged $1.39 a barrel Friday, ending just above the $30 level, as traders cashed in their profits from recent dramatic price run-ups linked to uneasiness about the Mideast crisis. Wholesale prices for home heating oil and unleaded gasoline also slid.

Early rumors that Iraq’s President Saddam Hussein had been ousted or assassinated started Friday’s slippage, pushing light crude below the $30-a-barrel psychological barrier for a time.

The absence of any hard news kept prices down; the October contract price for light crude oil closed at $30.04, down $1.39, on the New York Mercantile Exchange. On Aug. 22, light crude oil--often called West Texas Intermediate, a benchmark U.S. crude price--closed at $31.93 a barrel, the first push past the $30 level in nearly five years.

The October oil futures price began rising steadily last week. This week alone, shortened by the Labor Day holiday, prices rose $4 through Thursday.

The contract price for October delivery of home heating oil contracts fell 4.26 cents to close at 83.98 cents per gallon.

For the week, heating oil was up 8.09 cents.

October contracts for unleaded gasoline inched down to 93.06 cents per gallon, off 2.01 cents. For the week, gasoline slipped 3.26 cents a gallon.

Since Iraq invaded Kuwait on Aug. 2, the oil futures market has reacted with volatility to every bit of news out of the Middle East as well as to a lack of news.

On Thursday, traders blamed the price surge on nervous reaction to the news dearth. On Friday, no news meant lower prices, they said.

“It’s been a very rough week to explain,” said Andrew Lebow, crude oil analyst with E. D. & F. Man International Futures, a New York-based oil broker.

“The market is making some wild swings without anything underpinning it.”

Futures traders also noted that lower prices reflected the market’s hope that good news will come out of the weekend summit meeting in Helsinki between President Bush and Soviet President Mikhail Gorbachev.

Friday’s correction was inevitable, said Kevin Kelly, manager of futures trading at San Francisco-based Chevron Corp.’s international oil company.

“There was not all that much news (Thursday) to justify the kind of aggressive rally we had,” he said.

In addition, many traders who two weekends ago held long positions--betting that the price would rise--remember only too well how contract prices plummetted $4 a barrel on Monday, Aug. 27.

However, Kelly doubted that prices for crude oil and its products will continue for long on a downward trend.

“One hopes there will be some peaceful breakthrough, but the market is awaiting that before it abandons . . . this bullish strength,” he said.