Oil prices closed little changed Friday in a quiet yet volatile session. Traders saw evidence that President Bush's attempt to calm the energy markets was having some effect.
The November contract for delivery of light, sweet crude fell 3 cents to $39.51 a 42-gallon barrel on the New York Mercantile Exchange after trading as high as $39.95 a barrel and falling as low as $38.65. Later contract months closed narrowly higher.There was no news directly from the Middle East to influence trading, but the House voted during the afternoon to triple to 15 million barrels the amount of oil the government can remove from the nation's Strategic Petroleum Reserve. The vote was expected by the market, but still had a sobering effect on trading.
Also putting a damper on prices was speculation that the New York Merc would increase its margin requirements to limit the amount of money traders could borrow to purchase oil contracts.
Such a move would drive speculative traders out, reduce the volatility in the market and force prices down, said Nauman Barakat, a senior trader with Merrill Lynch Energy Futures.
Despite such bearish news, prices did not fall sharply Friday because they were supported by buying from traders afraid events over the weekend might send prices up further, said Jim Fiedler, an energy market analyst with E.D.&F. Man International Futures Inc.
Bush's decision Wednesday to tap 5 million barrels from the 590 million-barrel oil reserve was having some of the calming effect on the market that the president sought, analysts said.
Prices responded only briefly on Thursday to his decision, but analysts saw more of a reaction Friday.
Although the president cannot control what happens in a free market, "there's a general feeling that Bush is putting quite a bit of political pressure on the industry to keep the price below $40," said Fiedler, noting that Bush has pressured oil companies in the past to keep prices down.
"Bush is saying, `Read my lips, I want crude to stay below $40,' " Fiedler said.
Oil prices did cross the $40-a-barrel mark briefly Thursday but fell back. The October contracts for refined petroleum products expired Friday, causing some volatility, but as in the market for crude, trading was dominated by concerns about the Middle East.
Home heating oil for October delivery rose 0.61 cent to $1.0498 a gallon, and subsequent months also advanced.