Gulf War Fear Hikes Oil Price by $3 a Barrel : Market: Traders believe that they may have overestimated the chance of a negotiated settlement.

Oil shot up more than $3 per barrel on the futures market today as speculators bet on war in the Persian Gulf.

“We’ve got all sorts of little talk in the market of troops being increased in the Middle East on our side and on Iraq’s side,” said Brian Tagler, a broker at Shearson Lehman Brothers Inc. “Once again, the market is worried about confrontation.”

Light sweet crude oil jumped $3.02 to $34.10 per barrel for December delivery contracts on the New York Mercantile Exchange shortly after noon. January and February delivery contracts were up $2 per barrel and later months were all up by more than $1.

Today’s early trading was a continuation of crude’s rise of $1.71 per barrel on Wednesday. That upward surge halted a sharp slide that had knocked oil from above $40 per barrel to less than $30 as traders responded to hints of a peaceful resolution to the gulf crisis.

Traders now believe that they overestimated the potential for a negotiated settlement. They have begun wondering whether crude will move back into the $40 range or fluctuate in the $30 range.

Crude’s soaring prices since Iraq invaded Kuwait in August have been rooted in war psychology, as the world has maintained an adequate oil supply despite the global embargo of Iraqi and Kuwaiti crude.

“It’s not clear whether we are back in a fundamental market or if we need to keep a weather eye out for psychological changes,” said oil analyst Peter Beutel of Pegasus Econometric Group Inc. in Hoboken, N.J.

As oil moved up today, so did futures contracts for refined petroleum products and natural gas.

Unleaded gasoline was up 7.81 cents to 93.20 cents per gallon on November delivery contracts, with all other contract months trading higher. Home heating oil was up 6.88 cents to 92.00 cents per gallon on November contracts, with all later delivery months trading higher.

Natural gas was up 3 cents to $2.47 per 1,000 cubic feet on December delivery contracts. Most other delivery months were trading higher.