Oil Prices Jump Wildly With Gulf Peace Talks : Trading: Optimism leads to early declines, but Baker’s report that no progress was made sends cost of a barrel up $8.

Oil prices changed direction in a flash today, shooting up nearly $8 a barrel seconds after Secretary of State James A. Baker III said talks with Iraqi Foreign Minister Tarik Aziz on the Persian Gulf crisis had failed.

In hectic trading on the New York Mercantile Exchange, crude oil for delivery in February soared to $31.00 a barrel, climbing from an early low of $23.35 a barrel. Later profit-taking erased some of the gains and in late trading, oil was up 83 cents at $28 a barrel.

Oil products were also swept higher, with unleaded gasoline for February delivery climbing 4.82 cents to 74.75 cents a gallon from a low of 63.80 cents. Heating oil jumped up 3.70 cents to 78 cents a gallon.

“Everybody was glued to the television sets, waiting for Baker to speak, and when he said the talks failed, all hell broke lose,” said Susan Hammergren of Geldermann Inc.

“Literally, oil prices exploded on Baker’s words, and obviously, there was a lot of buying waiting in the wings,” said John Geraghty of B&C; Trading.

The price of West Texas Intermediate immediately jumped by $1 “ticks” as soon as Baker spoke, said Tom Blakeslee of Pegasus Econometrics Group, Hoboken, N.J.

“I don’t ever remember the market moving up so fast in so short a period of time. It’s an incredible move,” the trader said.

At a news conference in Geneva, Baker said he had failed to persuade Iraq to withdraw from Kuwait.

Earlier, prices were down more than $3 a barrel from Tuesday’s close on speculation that the talks were making progress.