Crude falls by over $1/bbl on US potential oil reserves release

17 August 2012 07:18  [Source: ICIS news]

SINGAPORE (ICIS)--Crude futures declined on Friday, with ICE Brent futures falling more than $1/bbl amid news that the US Government is considering releasing supplies from its strategic oil reserves, while comments from the Israeli President eased Middle East concerns.

At 05:48 GMT, October Brent crude on London’s ICE futures exchange was trading at $114.19/bbl, down by $1.08/bbl from the previous close. Earlier, the North Sea benchmark fell to a session low of $113.90/bbl, down by $1.37/bbl.

September NYMEX light sweet crude futures (WTI) were trading at $95.10/bbl, down by 50 cents/bbl from the previous close. Earlier, the US benchmark fell to a session low of $94.98bbl, down by 62 cents/bbl.

The US Government is reviewing the possibility of releasing supplies from its strategic reserves amid concerns that a rise in gasoline prices is having a negative impact on the economy and reducing the effectiveness of sanctions against Iran.

Supply concerns also eased after Israeli President Peres indicated that his country would not pursue unilateral military action against Iran and believed the US would prevent Tehran from successfully developing nuclear weapons.

Iran claims that its nuclear programme is for peaceful purposes and has denied accusations that it is developing nuclear weapons.

However, tensions with western powers and its Arab neighbours over its nuclear programme have resulted in a tightening of sanctions against Tehran which have inhibited its sale of Iranian crude oil.

Oil prices have risen to their highest level since early May 2012 amid supply concerns generated by heightened Middle East tensions resulting from the Iranian nuclear crisis and the ongoing civil war in Syria.

Brent prices have also climbed amid field maintenance which has reduced supplies from the North Sea. A larger than expected  decline in US crude and gasoline stocks this week has added further upward pressure on prices.

By: James Dennis
+65 6780 4327

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