After a quiet week in the Persian Gulf, oil fell more than $1 a barrel Friday on the market's perception that a Middle East war won't break out soon and that supplies are currently adequate.
On the New York Mercantile Exchange, the benchmark West Texas Intermediate crude for December delivery was down $1.17 from Thursday to $34 a barrel, which was, however, 99 cents higher than a week earlier.Friday's decline helped fuel a rally on the New York Stock Exchange where the Dow Industrials index of blue chip stocks jumped 35.89 points to 2490.84.
Except for Monday when WTI rose $1.44 after a Soviet mission to Iraq failed to make any progress toward peace, prices drifted up and down during the uneventful week in response to technical limits laid down in previous sessions and varying perceptions of supply and demand.
"Nothing happened all week as far as military action in Kuwait is concerned and the general perception is that nothing is going to happen until after the (Nov. 6) election," said Joe Miller of Shearson Lehman Hutton's International Energy Desk in New York.
"Most people don't anticipate anything will happen this weekend and with that we saw some liquidation of buy positions in one of the most boring sessions in recent weeks," said Bob Jonke of Cargill Investor Services, New York.
"Even with prices falling more than $1, it was uneventful. There was no fresh news (from the Middle East) and there was nothing to justify prices moving higher," Jonke said.
Steve Platt, senior energy analyst with Dean Witter Reynolds Inc. in Chicago, noted that President Bush appeared to soften his warlike stance with statements this week, including one that he would be willing to meet Iraqi President Saddam Hussein.
The trader also noted that Gen. H. Norman Schwartzkopf, commander of U.S. forces in Saudi Arabia, told the New York Times in an interview that while war could erupt "anytime," he did not expect military action soon.
The Energy Department also reported Thursday that the four-week average of crude, gasoline and heating oil supplies rose last week over the prior week although the oil industry's American Petroleum Institute reported late Tuesday that crude stocks dropped last week for the seventh week in a row.