Crude prices spike before falling back to small gain

Crude oil prices went as high as $128.60 in New York Friday before falling back to $125.22 per barrel, $1.14 above Thursday’s close on the New York Mercantile Exchange, while Brent crude gained 62 cents to $124.60 on the ICE Futures Europe exchange in London.

Prices spiked after Israeli Deputy Prime Minister Shaul Mofaz warned in comments that Iran is about to make what he characterized as a “major breakthrough” in its nuclear program.

A major contender to replace Prime Minister Ehud Olmert, who will resign in September, Mr. Mofaz is a former military official who is expected to take a hard line on Iran if he succeeds Mr. Olmert.

Prices were also helped after a Labor Department report showed that not as many jobs as expected were lost in the US in July.

In afternoon trade, Nymex September gasoline futures added 3 cents to $3.10 per gallon while September heating oil dropped 1 cent to $3.45 per gallon and September natural gas gained 25 cents to $9.37 per million British thermal units.

At-the-pump prices for regular unleaded gasoline dropped a bit over a cent to $3.898 per gallon on average in the United States.