Oil prices fell to their lowest point in six months Friday and stocks rose sharply on expectations that crude would flow steadily from the Persian Gulf despite war.
While the euphoria that swept Wall Street Thursday dissipated as the war unfolded, stocks and bonds were driven up by the relentless selling in the oil markets.The stock market built on its huge rally Thursday to post a record gain for the week.
Wall Street had worried for months that the outbreak of war in the Middle East would disrupt oil supplies, causing a worldwide shortage of crude and a surge of inflation.
But oil markets, amid a glut of crude, have dropped back, reflecting speculation that economic damage will be limited. They fell further Friday on fears that weekend developments could unleash further selling next week.
"The market is spooked," said Susan Hammergren of Geldermann Inc., commodities brokers. "We may be going into pending chaos."
After diving an unprecedented $10.56 a barrel Thursday, crude oil for delivery in February on the New York Mercantile Exchange lost another $2.19 to close at $19.25 a barrel.
It was the lowest close since July 19, 1990, when oil was at $18.99 a barrel.