Oil prices fell sharply near the close of trading Friday on a wild rumor of an Iraqi coup.
Oil had been moving lower anyway, as traders decided they had bid prices too high Thursday on erroneous speculation that President Bush was about to announce steps leading to an immediate conflict in the Persian Gulf."People aren't expecting any gunfire until next year now," said Thomas P. Blakeslee, an energy analyst with Pegasus Econometric Group Inc., in Hoboken, N.J.
The coup rumor floated in with about a half hour left to trade, pushing the already depressed price down another 60 cents.
"That probably just fueled things a little bit," said trader Ed Kevelson of Dean Witter Reynolds Inc.
Light sweet crude, the benchmark blend of petroleum, settled at $33.89 per barrel, down $1.64, for December delivery contracts on the New York Mercantile Exchange. Contracts for delivery in later months all closed more than $1 lower.
For the week, crude fell 11 cents a barrel for next-month delivery.
Oil opened lower Friday, as traders determined they had overestimated the impact of a news conference Bush had given the evening before.
During Thursday's session, oil shot up as traders speculated Bush's statement, which came after the market closed, would contain either an ultimatum to Iraqi President Saddam Hussein or a vow to airlift supplies to the U.S. Embassy in Kuwait.
Bush instead said he was vastly increasing the U.S. military presence in the gulf, which traders already had been anticipating.
"I think people were expecting some type of ultimatum and what they received was the same old thing," Blakeslee said.
Traders in the New York Mercantile Exchange recently have been scared of going through the weekend with speculative positions, so some of Friday's selloff came as they sold oil contracts.
As crude oil fell, it dragged down the price of refined products traded on the exchange, a key market for petroleum.
Wholesale home heating oil dropped 4.06 cents to 90.24 cents a gallon on December delivery contracts, while wholesale unleaded gasoline fell 2.28 cents to 88.23 cents a gallon for December delivery. Later contract months were all lower for both products.
For the week, heating oil rose 2.82 cents for next-month delivery, while unleaded gasoline fell .98 cent.
Natural gas prices were lower or unchanged Friday, with December delivery contracts falling .6 cent to $2.429 per 1,000 cubic feet.