Crude falls on US stock and possible release of strategic reserves

28 March 2012 11:04  [Source: ICIS news]

SINGAPORE (ICIS)--Crude futures weakened on Wednesday, undermined by a larger than expected build in US crude stocks and media reports of a possible release of strategic stocks by France, the US and the UK.

At 10:43 GMT, May Brent crude on London’s ICE futures exchange was trading at $124.30/bbl, down $1.24/bbl from the previous close. Earlier, the North Sea benchmark fell to a session low of $124.20/bbl, down by $1.34/bbl.

May NYMEX light sweet crude futures (WTI) were trading at $106.47/bbl, down 86 cents/bbl on the previous close. Earlier the US benchmark fell to a session low of $106.23/bbl, down by $1.10/bbl from the previous close.

Weekly US inventory data released on Tuesday by the industry body, American Petroleum Institute (API), revealed a much larger than expected 3.6m bbl rise in US crude stocks and an unexpected rise in gasoline stocks.

This was offset to some degree by a larger than expected 1.4m bbl drawdown in distillate stocks.

French newspaper Le Monde reported on Wednesday that France, the UK and the US were considering a possible release of strategic oil reserves in the coming weeks.

The move is viewed as an attempt to lower oil prices which have remained stubbornly high in March.

ICE Brent continued to trade above $124/bbl, close to their highest levels since April 2011 when prices surged as a result of the Libyan civil war.

Crude values have surged amid ongoing supply worries generated by heightened tensions between the West and Iran over Tehran’s nuclear programme and disruption to supplies from other producers in the Middle East and elsewhere.

The US and its allies have tightened sanctions against Tehran, while the European Union is set to introduce an embargo on Iranian oil imports by the European Union  from 1 July.

Iran is the world’s fourth largest oil producer and third largest oil exporter.

By: James Dennis
+65 6780 4359

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