NEW YORK (AP) _ Oil prices neared the $50-per-barrel threshold Friday and then eased back a bit when tensions appeared to ease in Iraq, raising hopes that attacks against the country's oil infrastructure would subside.
U.S. light crude for September delivery fell 22 cents to $48.48 a barrel in afternoon trading on the New York Mercantile Exchange, after crossing the $49 a barrel mark earlier in the session for the first time. The price had closed Thursday at $48.70, the highest Nymex closing price on record.
Oil prices are up about 57 percent in the past 12 months, although when adjusted for inflation, oil is still roughly $8 less per barrel than it was leading up to the first Gulf War.
With the situation in Iraq delicate and the worldwide supply cushion razor thin at a time of robust demand, traders said oil markets would remain on edge for some time.
However, the prospect of an end to the 2-week-old anti-U.S. uprising in Iraq gave reason for oil markets to take a breather.
Militiamen loyal to rebel Shiite cleric Muqtada al-Sadr on Friday removed their weapons from the revered Imam Ali Shrine in Najaf as part of an arrangement aimed at ending their revolt.
The militia has repeatedly threatened to target Iraq's vulnerable oil infrastructure.
``If the situation is alleviated and we get a peaceful settlement, oil prices could go down $2 really quick,'' said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
The showdown in Iraq is just one of a slew of factors that has driven crude prices to a series of record highs this year even as demand remains robust because of rebounding growth in major economies.
Analysts also cite the fear of more terror attacks in Saudi Arabia, the world's top producer, and the battle by Russian oil giant Yukos against bankruptcy.