Thursday, March 22, 2012

Oil lower as rich nations mull tapping crude reserves

SINGAPORE: Oil retreated in Asian trade Thursday, as France said industrialised countries were considering releasing part of their crude stockpiles to counter rising prices, analysts said.


New York's main contract, West Texas Intermediate crude for delivery in May, shed 20 cents to $107.07 per barrel while Brent North Sea crude for May settlement was down nine cents at $124.11.

"The French announcement is definitely having a downside effect on prices," said Justin Harper, market strategist at IG Markets Singapore.



"It's significant that apart from the US, a major power like France is talking about dipping into emergency stocks," he told AFP.

"There has been a lot of talk about countries releasing their reserves and traders will be happy when they actually start doing that."

French energy minister Eric Besson on Wednesday said France and other industrialised countries were considering releasing part of their strategic crude reserves to stave off escalating oil prices, Dow Jones Newswires reported.

"France is studying with its partners all possible options to fight the increase in oil prices," Besson was quoted as saying.

"Releasing part of the industrialised countries' strategic stocks is one of these options."

The statement from Besson comes amidst repeated assurances from the world's top crude producer Saudi Arabia that it would make up for a supply shortfall to compensate for lost Iranian output as Western sanctions over Tehran's suspected nuclear weapons program take effect.

The International Energy Agency has previously estimated that exports from Iran could plunge by about 800,000 barrels per day to one million barrels bpd after the middle of this year.

Energy-hungry nations have voiced concerns over the availability of alternative sources to replace Iranian imports cut off by sanctions.

-AFP/wm

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Source From Channel News Asia

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