Oil prices rose yesterday to their highest levels since the Persian Gulf War, pressuring gasoline prices and prompting concern from some analysts that oil will continue to drift upward unless world production improves.
Oil for November delivery jumped 17 cents to $23.16 a barrel in trading on the New York Mercantile Exchange, the highest close since Jan. 23.
The futures markets, which have been pressing cautiously upward since June, were reacting to a report by the American Petroleum Institute showing that U.S. oil inventories dropped by 1.25 million barrels to 338.3 million barrels last week.
Oil prices usually start their climb later in the fall, in anticipation of the winter heating season.
"This is almost a precedent to be at this level so early," said analyst Daniel Yergin, president of Cambridge Energy Research Associates. "The market is jittery right now, and oil prices could certainly move higher in the next two months. You could see this one coming."
Lower-than-expected oil output from the Soviet Union's deteriorating fields and Kuwait's war-damaged wells, along with the continuing constriction of Iraqi supplies, are keeping world supplies down and supporting higher crude prices, analysts said.
Still, without sustained higher crude prices, analysts said, the cost of gasoline at the pump probably would not go up much.
Industry observers said oil exports from the Soviet Union were lower than had been expected for this time of year -- the result, in part, of the political upheaval there.
Analysts said, however, that oil prices could swiftly drop below $21 a barrel if oil production from Kuwait and the Soviet Union picked up or if the winter weather in the United States was milder than in recent years.
"It would be foolish to think that crude oil prices will continue to rise much further," said Edward Murphy, director of finance, accounting and statistics at the American Petroleum Institute, the oil industry's main research group. "The factors that impacted the higher levels could turn around."
Scott T. Jones, president of AUS Consultants, said he had not expected the price of oil to reach $22 a barrel until November or December; now he anticipates it will return to that level quickly.
"There will be more near-term spikes in the coming weeks," Jones said. But, he predicted, "prices will probably soften to $21 or $22 a barrel in two to three weeks."
Jones said the high current prices indicate that traders either are expecting a colder winter, which would mean an increase in demand for crude oil, or believe that the significant cuts in oil production from foreign countries will continue into the winter months.