Oil falls to $114 as US plans to release stocks
BRENT crude oil fell to around $114 on Friday after the United States said it was considering the possible release of oil reserves to dampen prices and the Israeli president spoke out against any lone Israeli attack on Iran. News the White House was ‘dusting off old plans’ for a potential release of strategic oil stocks helped knock more than $1 per barrel off Brent, which hit a three-month high on Thursday. The global benchmark has risen more than a third in less than two months on worries that conflict over Iran’s disputed nuclear programme could lead to war, disrupting oil supplies from the Middle East. But the oil price rally has come at a time when world economic growth is slowing, dampening demand for fuel, and oil supplies have been ample, helping restock inventories, and many investors feel the recent price rises have been overdone. Brent crude fell $1.88 to a low of $113.39 a barrel before recovering to around $114.00 by 1335 GMT. The September Brent contract which expired on Thursday ended at the highest since May 2. US crude oil was flat at $95.60, after settling up $1.27. “The market moved a long way in quite a short time and we are now seeing some profit-taking,” said Eugen Weinberg, global head of commodities research at Commerzbank in Frankfurt. Weinberg said reports of a potential stocks release could prompt investors to sell long positions, hitting oil prices. “Oil prices may well have reached their peak for the time being. That said, supply shortfalls in the North Sea and geopolitical tensions in the Middle East will preclude any sharp decrease in prices.” US officials will monitor market conditions over the coming weeks, watching whether gasoline prices fall after the September 3 Labour Day holiday, in line with usual practice, a Washington source with knowledge of the situation told Reuters. The United States has not yet held talks with international partners about a coordinated move. The source said Britain, France, Germany and other partner nations in the Paris-based International Energy Agency (IEA) had been receptive to a potential release a few months ago when conditions were similar.