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Oil falls on reserve release talk, US supply data
Source: Agencies |
March 29, 2012, Thursday
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OIL prices dropped nearly 2 percent yesterday following reports that Western nations may be considering a release of oil reserves onto the world market. Government data showing an increase in US supplies contributed to the decline.
Benchmark US crude fell by US$1.92 to end at US$105.41 per barrel in New York while Brent crude lost US$1.38 to finish at US$124.16 per barrel in London.
Prices tend to fall as supplies go up. US supplies surged last week by twice the amount that analysts were expecting, according to government data released yesterday. And French officials said the US and Europe are thinking of supplying markets with more oil from emergency reserves in hopes of pushing prices even lower.
The tactic briefly worked last summer. At the time, the concern was the loss of Libyan oil, then about 2 percent of global output. This time, policy makers are concerned that a prolonged standoff with Iran could disrupt supplies.
Western nations fear that Iran is developing a nuclear weapon, and they've been putting pressure on the oil-rich nation to open its facilities to inspection. Iran denies the claim, though it has turned away international inspectors who could confirm it.
As both sides dig in, Japan and the European Union have cut back on imports of Iranian oil. An international banking service company has also made it more difficult for Iran to sell oil to other countries. Analysts say the potential disruption to shipments of oil from Iran, the world's third-largest exporter, and other oil-producing nations in the region has driven oil prices about US$15 per barrel higher than they otherwise would be.
France's government said yesterday it is considering a release of emergency stockpiles as part of a US-led effort to cool off the rise in oil prices. Government spokeswoman Valerie Pecresse said France is waiting for recommendations from the International Energy Agency before tapping its reserves.
The White House said earlier this month that there were no plans to release oil from the Strategic Petroleum Reserve. On yesterday, White House spokesman Josh Earnest wouldn't say whether the US had asked France to consider releasing oil from its strategic reserves.
"We are coordinating with our partners around the globe to confront the global phenomenon that is the volatility in the energy markets right now," Earnest added.
In Germany, a spokesman for Chancellor Angela Merkel said the government had received no official request to release its reserves. "If there were concrete proposals or requests, we would examine them," Steffen Seibert told reporters.
In other energy trading, heating oil lost 1.07 cents to end at US$3.2079 per gallon and gasoline futures fell by 1.01 cents to US$3.3955 per gallon. Natural gas futures gave up 1.7 cents to finish at US$2.191 per 1,000 cubic feet, setting a new 10-year low.
Benchmark US crude fell by US$1.92 to end at US$105.41 per barrel in New York while Brent crude lost US$1.38 to finish at US$124.16 per barrel in London.
Prices tend to fall as supplies go up. US supplies surged last week by twice the amount that analysts were expecting, according to government data released yesterday. And French officials said the US and Europe are thinking of supplying markets with more oil from emergency reserves in hopes of pushing prices even lower.
The tactic briefly worked last summer. At the time, the concern was the loss of Libyan oil, then about 2 percent of global output. This time, policy makers are concerned that a prolonged standoff with Iran could disrupt supplies.
Western nations fear that Iran is developing a nuclear weapon, and they've been putting pressure on the oil-rich nation to open its facilities to inspection. Iran denies the claim, though it has turned away international inspectors who could confirm it.
As both sides dig in, Japan and the European Union have cut back on imports of Iranian oil. An international banking service company has also made it more difficult for Iran to sell oil to other countries. Analysts say the potential disruption to shipments of oil from Iran, the world's third-largest exporter, and other oil-producing nations in the region has driven oil prices about US$15 per barrel higher than they otherwise would be.
France's government said yesterday it is considering a release of emergency stockpiles as part of a US-led effort to cool off the rise in oil prices. Government spokeswoman Valerie Pecresse said France is waiting for recommendations from the International Energy Agency before tapping its reserves.
The White House said earlier this month that there were no plans to release oil from the Strategic Petroleum Reserve. On yesterday, White House spokesman Josh Earnest wouldn't say whether the US had asked France to consider releasing oil from its strategic reserves.
"We are coordinating with our partners around the globe to confront the global phenomenon that is the volatility in the energy markets right now," Earnest added.
In Germany, a spokesman for Chancellor Angela Merkel said the government had received no official request to release its reserves. "If there were concrete proposals or requests, we would examine them," Steffen Seibert told reporters.
In other energy trading, heating oil lost 1.07 cents to end at US$3.2079 per gallon and gasoline futures fell by 1.01 cents to US$3.3955 per gallon. Natural gas futures gave up 1.7 cents to finish at US$2.191 per 1,000 cubic feet, setting a new 10-year low.
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