ENERGY : Oil Ends Day Up 16 Cents in Very Volatile Trading

Oil prices were slightly higher Wednesday as traders regrouped their positions and braced for a second week of war in the oil-rich Persian Gulf.

“People are sobering up to the idea that this will be a long war,” said George Nickas of Geldermann Inc.

In another day of extreme volatility, crude oil for delivery in March closed 16 cents higher at $22.04 a barrel on the New York Mercantile Exchange after giving back a rally of $1.62 to $23.50.

Some of the gain for the March contract was attributed to lower supplies of home heating oil and jet fuel, and to catch up with the February contract, which expired Tuesday at $24.18 a barrel.

During Wednesday’s session, prices opened higher and stayed up much of the day, largely on the basis of an American Petroleum Institute report showing that the nation’s supply of distillates, which includes home heating oil and jet fuel, had fallen last week.

API said the stockpile of distillates fell to 119 million barrels, from 126.8 million a week earlier.

Heating oil stocks were down because of cold weather, and the repeated allied bombing raids on Iraqi targets were apparently starting to put some pressure on the world’s jet fuel supply, analysts said. Futures prices for home heating oil and unleaded gasoline rose and then slid back in New York, with the fluctuations imitating crude oil behavior.

Home heating oil for delivery in February finished at 70.15 cents per gallon, up 1.69 cents, after rising as high as 74.40 cents. Unleaded gasoline for February delivery closed at 63.10 cents a gallon, down 0.45 cent, after hitting the day’s high of 67.35 cents.

Natural gas prices fell. Contracts for March delivery of 1,000 cubic feet were off 9.3 cents at $1.385.

Energy Secretary James Watkins said Wednesday that oil prices should remain in the $20- to $25-a-barrel range despite the Gulf War.