Crude Oil Prices Seesaw on Fears of War in Gulf

Oil prices were almost unchanged in seesaw trading on the futures market by midafternoon today, as traders kept betting on war in the Persian Gulf.

“It’s definitely just the increased war fears and seeing the war premium getting put back in the market,” said Ann-Louise Hittle, a senior oil analyst with Shearson Lehman Brothers Inc.

Light, sweet crude oil, the key grade, was up 95 cents, to $35.20 per barrel, for December delivery contracts on the New York Mercantile Exchange late in the morning but dropped back. Contracts for delivery in later months were all trading higher as crude moved up sharply for a third straight session.

Oil regained all of the ground it lost in Monday’s record tumble of $5.41 per barrel. But trading was erratic, and speculators were left uncertain on oil’s future direction.

“It’s a market that has gotten increasingly emotional and is very much reacting to the situation in the Middle East,” Hittle said.

Recently, big shifts in oil prices, both up and down, have seemed to come with greater frequency as the market has appeared to become even more volatile, analysts say.

“There is some sense from previous reports that time is running out on the situation,” said William Byers, an analyst with Bear Stearns & Co.

He said many traders believe an attack on Iraqi forces might occur either just before or just after the U.S. elections Nov. 6.