24 June 2011 06:20 [Source: ICIS news]
SINGAPORE (ICIS)--Crude futures rose more than $1/bbl on Friday morning, supported by a softer US dollar, after prices plummeted to their lowest level in four months in the previous session on news that the International Energy Agency (IEA) will release oil from emergency reserves.
At 04:55 GMT, August Brent on London’s ICE futures exchange was trading at $108.50/bbl, up by $1.24/bbl from the previous close. Earlier, the North Sea benchmark rose to a session high of $108.70/bbl, up by $1.44/bbl.
August NYMEX light sweet crude futures were trading at $92.19/bbl, up by $1.17/bbl from the previous close. Earlier, the US benchmark rose to an intra-day high of $92.34/bbl, up by $1.32/bbl.
The decline in the value of the US dollar on Friday made dollar-denominated commodities such as oil more attractive to international investors.
The 28 IEA member countries have agreed to release 60m barrels of oil in the coming 30 days, IEA executive director, Nobuo Tanaka, said in a statement on 23 June.
The US is set to supply around 30m barrels of the total volume from its Strategic Petroleum Reserve (SPR). The IEA will review the oil market and the impact of the move and decide on possible further steps within the next month.
The move by the IEA, which represents consuming nations in the developed world, is a response to concerns over the ongoing disruption of oil supplies from Libya and worries that greater tightness in the oil market threatens the global economic recovery.
There are also worries that the normal seasonal increase in demand expected in the summer will further exacerbate the shortfall.
The IEA estimates that the unrest in Libya had removed 132m barrels of light, sweet crude oil from the market by the end of May, or around 1.5m bbl/day. The IEA expects that Libyan supplies will largely remain off the market for the rest of 2011. Global demand is presently around 88m bbl/day.
Total oil stocks in IEA member countries amount to over 4.1bn barrels, and nearly 1.6bn barrels of this are public stocks held exclusively for emergency purposes. IEA net oil-importing countries have a legal obligation to hold emergency oil reserves equivalent to at least 90 days of net oil imports. These countries are holding stock levels well above this minimum amount, currently at 146 days of net imports, according to IEA.
($1 = €0.70)
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