SUPPLIES, MIDEAST TENSION FUEL GAINS IN OIL Petroleum futures rallied today in a market that was expecting declines in domestic supplies and became further unsettled by escalated Mideast fighting. Crude oil, gasoline and heating oil all posted gains on the New York Mercantile Exchange, with crude oil prices matching life-of-contract highs. Crude for delivery in May closed 17 cents higher at 18.84 dlrs a barrel. "Crude futures could jump above 19 dlrs a barrel but will not remain there long if products are not strong," Robert Murphy, account executive at E.F. Hutton, said. Traders said prices were supported by anticipation that the American Petroleum Institute would report a decline in domestic inventories of petroleum products in a weekly report. Traders said prices also were supported by an escalation in the Iran-Iraq war, with the Iranians reportedly launching a new offensive against Iraqi positions, and Iraq attacking offshore oil fields and an oil export depot. Buying by speculators continued to prompt gains in gold and silver futures on the Commodity Exchange in New York. Gold prices retreated at midday, but rallied before the close with support from the silver market, which was approaching two-year highs, traders said. Soybean futures posted strong gains on the Chicago Board of Trade, while corn and wheat were mostly higher. Traders said cash sales have been slow in the country, and the soybean harvest in Brazil has been delayed by rain, which is limiting supplies. In addition, the Agriculture Department last week projected a substantial drop in soybean acreage this year. Monday's report that the USDA inspected 46 mln bushels of corn for export last week was unexpectedly high and, coupled with a lack of farm sales, provided support for the corn market, traders said. Live hogs and frozen pork bellies rallied on the Chicago Mercantile Exchange, while cattle ended lower. Live hogs pushed ahead on a lack of supplies because many farmers are turning their attention to spring planting rather than marketing livestock, traders said, noting that cash sales have been lighter than expected this week. The lack of marketing also has supported pork bellies, but prices drifted lower for moderate losses in nearby months as speculators sold contracts to take profits, traders said. Cattle prices closed lower but continued to show strength related to tight supplies. Prices pushed ahead to new contract highs, extending gains past three-year peaks set Monday, as tight supplies forced meat packers to bid aggressively for available animals. However, some traders sold contracts to take profits after the extended rally, which has seen the April delivery contract soar to 69.90 cents a pound from 56 cents a pound at the start of the year. New York coffee futures closed higher on trade talk Brazil would not be an aggressive seller near term, analysts said.