N.Y. Oil Falls From Record on as Turkish Assault Fears Ease

Oct. 22 (Bloomberg) -- Crude oil fell from a record as concern eased that a Turkish assault on Kurdish militants in northern Iraq was imminent.

Turkey's government, which came under pressure to invade Iraq after eight Turkish soldiers were missing after fighting near the Iraqi border, said it would give diplomacy a chance. An Iraqi pipeline carried 153,000 barrels of oil a day last month to the Turkish port of Ceyhan, a Bloomberg News survey showed.

``First the Turks were going to invade, then they weren't going to invade,'' said Roger Read, an analyst with Natixis Bleichroeder Inc. in Houston.

Crude oil for November delivery fell $1.04, or 1.2 percent, to settle at $87.56 a barrel at 2:50 p.m. on the New York Mercantile Exchange. The November contract expired today. The more actively traded December contract fell 93 cents to $86.02.

The Kurdistan Workers' Party, or PKK, has agreed to find a political solution to the conflict with Turkey ``away from violence and fighting,'' the group said in a statement today on the Web site of Iraq President Jalal Talabani's Patriotic Union of Kurdistan movement.

Turkey's government will give diplomacy a chance. Spokesman Cemil Cicek said the government was calling for ``common sense and unity.''

``The PKK statement was not as bearish as expected, as they only reaffirm a cease-fire they say has been in place since June,'' said Tim Evans, an analyst with Citigroup Global Markets Inc. in New York.

Raid Not `Imminent'

U.S. Defense Secretary Robert Gates said a Turkish raid on rebels in Iraq wasn't ``imminent.'' The U.S. says it wants Turkey to show restraint as a cross-border offensive against the PKK may exacerbate regional violence.

The latest clash yesterday between Turkey's army and Kurdish militants near the border with Iraq killed 44 people. Thirty-two members of the Kurdistan Workers' Party, or PKK, who had crossed into Turkey from Iraq, and 12 Turkish soldiers died in the fighting, the Turkish armed forces said on its Web site.

``It looks like the White House is putting a lot of pressure on the Turks to hold off now and the Turks are saying they will wait a bit,'' Mueller said.

U.S. stock markets rose today, retracing some of last week's losses and lessening concern that world economic growth may slow, reducing energy demand.

``This morning, everyone wanted to throw themselves out a window, and now that the Dow is up, they figure the economy is going to be OK,'' Read said.

The Dow Jones Industrial Average was up 22.93 at 13,544.95 as of 2:10 p.m. New York time. It fell 366.94, or 2.6 percent, on Oct. 19.

Oil touched an intraday record of $90.07 on Oct. 19, the highest since futures began trading in 1983, after Turkish lawmakers approved a resolution to strike militants in Iraq, home to the world's third-largest oil reserves.

Brent crude oil for December settlement fell 52 cents to $83.27 a barrel on the London-based ICE Futures Europe exchange.

Twenty of 29 analysts surveyed by Bloomberg News on Oct. 19 said crude oil may decline this week.