Oil Prices Edge Up; Yamani-Inspired Rally Cools

NEW YORK â€”  Oil prices closed moderately higher Friday as the strong rally touched off by the ouster of Ahmed Zaki Yamani as Saudi Arabia’s oil minister ran out of steam.

Analysts said the buying momentum slowed amid some profit-taking, short-selling and moving aside by traders waiting to see what would result from the removal of Yamani, who has been a prominent leader in the actions of the Organization of Petroleum Exporting Countries for 24 years.

At the New York Mercantile Exchange, contracts for December delivery of West Texas Intermediate, the benchmark U.S. crude, closed at $15.27 a 42-gallon barrel, up 23 cents. The price had jumped $1.31 a barrel on Thursday.

Among contracts for November delivery of refined products, heating oil rose 0.97 cent a gallon Friday to 40.54 cents after rising 2.8 cents Thursday. Unleaded gasoline, up 2.15 cents a gallon Thursday, added another 0.61 cent Friday.

Word that Yamani’s replacement, Hisam Nazer, had asked for an emergency meeting of OPEC’s pricing committee had helped spark Thurday’s rally, analysts said, since some traders saw it as a sign of Saudi determination to drive prices higher.

This view was buttressed further early Friday by an official Kuwait News Agency report that the head of OPEC’s pricing committee--Kuwait’s oil minister, Sheik Ali al Khalifa al Sabah--was making “intensive contacts� to set a date for the meeting.

But analysts said technical reasons--short-selling, short covering and profit-taking--were mainly behind the price moves.

In a short sale, a trader sells borrowed oil in the hope that the price will fall before the oil must be replaced. Short covering is buying the oil to fulfill that obligation.

On Thursday, prices soared because many traders, unsure of the implications of Yamani’s ouster, bought heavily to replace contracts they had previously sold in anticipation of lower prices, analysts said.

On Friday, analysts said, traders increasingly decided that prices had gotten high enough to warrant selling to take profits.