UpdateUS to release 30m bbl of oil from strategic reserve

23 June 2011 18:01  [Source: ICIS news]

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HOUSTON (ICIS)--The US will release 30m bbl of oil from its Strategic Petroleum Reserve as part of the 60m bbl that the International Energy Agency (IEA) plans to release over the next 30 days, the US Department of Energy (DOE) said on Thursday.

The US and the IEA are releasing the oil in an attempt to offset disruptions in supply caused by unrest in the Middle East, the DOE said.

Libya alone has caused a loss of roughly 1.5m bbl/day from global markets, the DOE said.

The US will release 30m bbl of oil from its Strategic Petroleum Reserve. The reserve is at a historically high level of 727m bbl.

News of the release drove energy markets lower.

West Texas Intermediate (WTI) fell by $4.45/bbl in midday trading to reach $90.96/bbl. WTI had bottomed out at $89.69/bbl before starting to rebound.

Earlier, Brent crude on London’s ICE futures exchange fell more than $6/bbl on Thursday to just under $108.50/bbl, after the IEA announced it will make 60m bbl of oil available to the market in order to offset Libyan disruption.

The 28 IEA member countries have agreed to make 2m bbl/day of oil available from their emergency stocks over an initial period of 30 days in response to the ongoing shortage of oil supplies from Libya as greater tightness in the oil market threatens to undermine the global economic recovery. 

“I expect this action will contribute to well-supplied markets and to ensuring a soft landing for the world economy,” said IEA executive director Nobuo Tanaka.

Meanwhile, the US dollar strengthened this morning after the US Federal Reserve indicated that further monetary injections will not be implemented.

By 13.10 GMT, August Brent crude had hit a low of $108.10/bbl, a loss of $6.11/bbl from Wednesday’s close of $108.10/bbl, before recovering to around $108.46/bbl.

At the same time, August NYMEX light sweet crude futures were trading around $91.09/bbl, having hit a low of $90.32, a loss of $5.09 from the previous close.

Additional reporting by Kawai Wong

By: Al Greenwood
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