SINGAPORE: Oil prices rose to above $92 a barrel Friday in Asia, clawing back some of the previous session's big losses as investors mulled the impact of the IEA's release of emergency crude supplies.
Benchmark oil for August delivery was up $1.16 to $92.18 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. In London, Brent crude for August delivery was up 99 cents to $108.25 a barrel on the ICE Futures exchange.
Crude fell $4.39 to settle at $91.02 on Thursday after the International Energy Agency said it will make 60 million barrels available over a 30-day period, half of which will come from the U.S. Strategic Petroleum Reserve.
Analysts said the move likely reflected increasing concern that the global economy is slowing, and that high oil prices exacerbate quickening inflation and tepid consumer demand.
Earlier this week, Federal Reserve Chairman Ben Bernanke warned that the U.S. economy is weaker than previously forecast, and lowered this year's gross domestic product growth estimate to 2.9 percent from 3.3 percent.
The release of reserves also comes after OPEC declined to boost its production quotas at a meeting earlier this month.
Some observers were puzzled by the timing of the move since crude had already fallen from near $115 on May 2 and Libya's 1.6 million barrels a day of oil output have been shut down since February.
"The IEA's announcement appears to be nothing more than a well-timed public relations stunt designed to punish speculators," said Richard Soultanian of NUS Consulting. "The impact will be short-lived and the markets will quickly revert back to the pattern they have been following for the past months, which is closely following movements in the U.S. dollar."
When the dollar gains, crude tends to fall because a stronger U.S. currency makes commodities such as oil more expensive for investors with other currencies. When the dollar weakens, crude prices usually go up.
The euro was steady at $1.4257 on Friday after dropping Thursday.
In other Nymex trading in July contracts, heating oil rose 4.1 cents to $2.82 a gallon while gasoline gained 2.5 cents at $2.86 a gallon. Natural gas futures added 1.1 cents at $4.20 per 1,000 cubic feet. - AP
NEW YORK: Oil tumbled Thursday after the International Energy Agency, which includes the U.S., said it will release some of its emergency oil supplies to stave off a possible spike in energy prices that could strain the global economic recovery.
The IEA, based in Paris, will make 60 million barrels available over a 30-day period. Half of that will come from the U.S. Strategic Petroleum Reserve, which currently holds 727 million barrels of crude. The SPR was last tapped in 2008 as oil rose to a record $147 per barrel.
With Libya's oil supplies likely unavailable for at least the remainder of this year because of unrest there, and global demand for oil expected to grow in the summer, the IEA said it was concerned that tighter supplies threatened to "undermine the fragile global economic recovery."
Benchmark West Texas Intermediate crude fell $4.39, or 4.6 percent, to settle at $91.02 per barrel on the New York Mercantile Exchange.
Brent crude, used to price many international varieties, lost $6.95, or 6.1 percent, to settle at $107.26 per barrel on the ICE Futures exchange in London.
The IEA's action comes two weeks after the Organization of Petroleum Exporting Countries failed to agree to boost oil production. At the time, IEA said it was disappointed by OPEC's lack of response to rising oil prices.
The move was somewhat unexpected because oil prices have dropped in the past few weeks. WTI is down about 20 percent from its recent high of $113.93 per barrel at the end of April. Brent has fallen about 14 percent from a high of $126.12.
Michael Lynch, president of Strategic Energy & Economic Research said the release of oil over the next month will probably depress prices temporarily, but he's doubtful it will have a long-term impact.
"It creates an immediate glut (of oil)," he said "But they're not solving the problem."
If oil demand continues to rise to historic levels this year, oil suppliers will continue to have trouble keeping up, Lynch said.
The IEA announcement came amid further indications of a slow economic recovery in the U.S. Federal Reserve Chairman Ben Bernanke on Wednesday warned that some problems - in the financial and housing sectors - would linger into next year. And on Thursday the Labor Department reported an increase in applications for unemployment benefits.
In other Nymex trading, heating oil fell 17.15 cents, or 5.8 percent, to settle at $2.7994 per gallon and gasoline futures lost 15.24 cents to settle at $2.7764 per gallon. Natural gas gave up 12.4 cents to settle at $4.193 per 1,000 cubic feet. - AP
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