Oil Down $4; 2nd-Biggest Fall
NEW YORK — Oil prices sank more than $4 today, the second-biggest fall on record, after President Bush said he is willing to “go the extra mile for peace†in the Persian Gulf.
“I blinked one second and the market was a dollar lower,†said Victor Yu, a Prudential-Bache Securities trader.
Crude oil for delivery in January closed $4.06 to $28.85 a barrel on the New York Mercantile Exchange. It was the second-biggest fall ever recorded in one day, outpaced only by the tumble of $5.41 on Oct. 22.
“I’ve never seen it move so fast; it took us all by surprise,†one trader said.
Oil is also sharply below its record high of $41.15 a barrel set on Oct. 10.
Oil products also broke down, with unleaded gasoline for December delivery closing 5.79 cents lower at 77.58 cents a gallon and heating oil ending 7.65 cents down at 85.87 cents a gallon.
Before Bush’s statement during a news conference in Washington, prices were falling gently in thin trade, reacting to the widely expected U.N. vote late Thursday authorizing force against Iraq unless it withdraws from Kuwait by Jan. 15.
“The market collapsed as soon as Bush said he was willing to put options on the table,†said Brian Tagler, of Lehman Bros. “Bush is being cautious about using force and may use the U.N. resolution as a tool to maneuver an Iraqi withdrawal from Kuwait,†he said.
Traders said heavy liquidation by computer funds also contributed to the selloff in oil.
“A combination of technicals (factors) and the speech just broke the market down,†said Tom Bentz at United Energy Inc.
Analysts said the deadline for Iraq had taken the war premium out of the oil market.
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