Crude futures were traversing record territory well above $83 a barrel Friday as investors grew concerned about rising tensions between Turkey and Kurdish rebels in northern Iraq. November light sweet crude recently climbed 69 cents to $83.77 on the New York Mercantile Exchange and earlier surpassed $84. Reformulated gasoline edged 4 cents higher to $2.09 a gallon, and heating oil gained a penny to $2.23 a gallon. The near-term natural gas contract moved 2 cents higher to $6.90 per million British thermal units. Crude had advanced $1.78 to $83.08 on Thursday on the combination of geopolitical worries out of Kurdistan and jitters about the tightness of global oil supplies. Turkey is threatening to send troops across its border and into Iraq to battle Kurdish rebels in the area. The sides have been hostile for years, and clashes have not been uncommon. However, the U.S. has found friends in both during its military campaign in Iraq, and the Bush administration is hoping that fighting doesn't break out. According to Alan Mandel, analyst at Alan M. Trading, some traders fear that fighting would disrupt oil flows through a pipeline that runs through the region. However, the situation in Kurdistan is "likely overblown," according to Gregg Priddy, energy analyst at the Eurasia Group. "There is a long history of Turks pursuing Kurds in northern Iraq," says Priddy. "However, the Turkish troops usually don't venture too far across the border. Also, there is no oil in that part of Iraq, so there isn't much of a chance that the activity there will affect the supply of oil."
Elsewhere, the Energy Information Administration announced earlier this week that oil inventory figures were more bullish than had been expected. Crude stores fell by 1.7 million barrels during the week ended Oct. 5, whereas analysts were looking for an increase of 1.5 million barrels. The numbers continued to support crude prices in Friday's trading session, Mandel said. Meanwhile, energy stocks moved broadly higher. Leading the pack was BP ( BP), which revealed a massive restructuring program intended to streamline the company and restore its competitive position against the other majors. BP plans to shave down its main business segments from three to two, with a third, smaller unit dedicated to alternative energies. BP was last trading 4.9% higher at $75.34 a share. Also advancing was Royal Dutch Shell ( RDS.A), which rose 1.5% to $83.15. Among ratings changes, Friedman Billings downgraded two coal processing firms. Massey Energy ( MEE), lowered to underperform from market perform, was down 2.9% to $26.50. Alpha Natural Resources ( ANR), downgraded to market perform from outperform, was 0.6% lower at $26.15.