ENERGY : Crude Prices Soar in Befuddling Session

In a late wave of buying that left many traders befuddled, crude oil futures shot up Thursday to record highs, soaring nearly $2 a barrel to $35 before falling back.

The price of a barrel of West Texas Intermediate, the U.S. benchmark crude, to be delivered in October closed at $34.71, up $1.53, on the New York Mercantile Exchange. That shattered the Merc’s previous record close of $33.63 reached only on Monday, when the previous trading high of $33.75 was also matched.

The Mideast was relatively quiet, and no other major news reports seemed responsible for triggering the increase in prices, traders said. Oil prices in European markets fell slightly in lackluster trading; the light volume was attributed to observance of the Jewish New Year.

The sharp rise in New York prices “took everybody by surprise,” said James Fiedler, a vice president at ED&F; Man International Futures Inc., a New York brokerage. Prices “took off an hour before the close.”

Refined petroleum products also rose sharply at the Merc. October heating oil rose 3.33 cents to 91.86 cents a gallon on forecasts of a colder than normal fall, which would increase demand. Reports of gasoline refineries closing for scheduled maintenance helped raise the price of October unleaded gasoline by 1.64 cents to 91.54 cents a gallon.

Thursday was the last day of trading in October crude oil futures contracts, and many traders had expected weaker prices as speculators and others who did not want to take delivery of the oil would have been forced to sell. Those who wanted to roll over their October contracts into November would have been forced to sell as well.

As a result, many traders earlier may have sold October oil contracts “short,” expecting to buy back the contracts later at lower prices and thus profit from the decline. But instead of falling, crude oil prices kept rising, forcing short sellers to buy October contracts or face greater losses.

“Some buying came in, and it looked like it was the shorts,” said Fiedler.

“Strange things happen on the last day a contract ends,” said Kevin Kelly, manager of futures trading at Chevron International in San Francisco. “It’s hard to explain this one.”

With the end of trading in October oil futures, the market shifted its attention to November contracts, Kelly said. November crude rose by 45 cents to $33.42 a barrel.

“We are still in a bull market,” Kelly said, but he declined to offer specific forecasts. “We are in uncharted waters, making the predictions game even tougher.”