Oil Moves Lower After Rumor-Fed Rally Fizzles
NEW YORK (AP) _ Oil prices finished lower Thursday after rallying on an erroneous rumor that Iran was invading Iraq.
Light sweet crude oil for delivery in April settled at $20.27 per barrel, down 18 cents, at the New York Mercantile Exchange.
Oil fell in early trading, then strengthened again in the afternoon when traders responded to a report out of Greece that quoted an Iranian dissident group in Iraq as saying the Iranians were preparing an attack on Iraq.
By the time the report reached the oil pits, it had been embellished by hearsay into a full-blown invasion.
″We did run up on a rumor today that Iran had invaded Iraq,″ said Ed Kevelson, an oil trader with Dean Witter Reynolds Inc. ″It got to the floor in sort of a scrambled way, and then when the full text of the story came out, we couldn’t hold the gains.″
Minus the rumor, the market seemed to be aimlessly looking for direction, analysts said.
Refined petroleum products also finished lower.
Unleaded gasoline for April delivery took the biggest hit, falling 1.45 cents to close at 69.86 cents a gallon.
Gasoline futures for near-month delivery had been overvalued, particularly at a time when refiners along the Gulf Coast are selling winter-grade gasoline, said Rita Beale, petroleum products analyst with Shearson Lehman Brothers Inc.
″They’re trying to get rid of their winter stuff,″ she said. Gasoline is blended differently for the different seasons, under environmental regulations intended to reduce the amount of fuel that evaporates.
Demand for gasoline still seems strong, though, as the summer driving season approaches with the nation’s supply at its lowest level in years, analysts said.
Home heating oil for delivery in April settled at 56.53 cents a gallon, down .28 cent. Natural gas for delivery in April closed at $1.381, down 1.4 cents per 1,000 cubic feet.
In London, North Sea Brent Blend crude settled at $20.03 per barrel, down 78 cents on contracts for April delivery as they expired Thursday at the International Petroleum Exchange.