Tags: Oil | crude | reserves | IEA

Brent Crude Falls on Report IEA to Tap Strategic Reserves Soon

Friday, 24 August 2012 02:18 PM

Brent crude futures fell on Friday after a report that the International Energy Agency is likely to tap strategic oil reserves as soon as September, dropping its resistance to a U.S.-led plan.

The report that the IEA, whose chief recently dismissed the need for a release, was in the industry journal Petroleum Economist, cited unnamed sources.

Reuters reported last week that the White House had begun "dusting off" previous plans for a possible release from its Strategic Petroleum Reserve as it fears that the sharp rise in oil prices since June could undermine the effect of sanctions on Iran.

"Oil prices declined on word of a change of heart at the IEA on a coordinated release of global SPR barrels. The market has been very sensitive to speculation over a release, which, if it were to occur, would work to lower prices for a time," said John Kilduff, partner at Again Capital LLC in New York.

U.S. crude pared its gains and seesawed on the report of the possible IEA action, while receiving support from a threat to Gulf of Mexico production as Tropical Storm Isaac approaches.

Tropical Storm Isaac took aim at flood-prone Haiti on Friday and was expected to become a hurricane when it churns into the Gulf of Mexico early next week, on a path that could see it make landfall anywhere from New Orleans to the Florida Panhandle.

BP Plc said it was shutting production at its Thunder Horse oil and gas platform in the Gulf of Mexico, the world's largest, as well as evacuating all workers from the structure ahead of the storm.

Another potential threat to supply looms after Norwegian oil services workers broke off wage talks with oil companies on Friday, taking the sector a step closer to its second strike within two months and leaving government mediation as the next formal step in the dispute.

Brent October crude fell $1.06 to $113.95 a barrel by 1:54 p.m. EDT (1754 GMT), having dropped to $113.67 after reaching $115.28.

Brent crude futures needs to settle above last Friday's $113.71 per barrel settlement, and U.S crude above $96.01, in order to post a fourth straight weekly gain.

Sensitivity to an upcoming maintenance-related drop in North Sea production and ongoing Middle East turmoil helped Brent hit a three-month peak at $117.03 on Aug. 16, as the September contract expired and went off the board at $116.90 a barrel, the highest settlement since May 2.

Brent has recovered from a low of $88.49 posted on June 22 after retreating from the 2012 peak at $128.40 hit on March 1.

On Friday, U.S. October crude was near flat, up 1 cent at $96.28 a barrel, having swung from $95.41 to $97.17, either side of the 200-day moving average of $96.75.

U.S. crude has recovered after sliding below $78 a barrel in late June.


Oil had a muted reaction to another round of inconclusive talks between the United Nations nuclear agency and Iran.

The U.N.'s International Atomic Energy Agency said important differences remain with Iran after Friday talks about Tehran's nuclear program and that there were no plans at this stage for further meetings.

Iran's envoy said the talks made some progress, but differences remained.

Israeli Prime Minister Benjamin Netanyahu accused Iran of making "accelerated progress towards achieving nuclear weapons", adding that it was "totally ignoring" Western demands to rein in its atomic program.

The violent conflict in Syria continued to send refugees fleeing the country.

© 2020 Thomson/Reuters. All rights reserved.

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Friday, 24 August 2012 02:18 PM
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