Oil prices in Asia fall on American stock release plan
Oil prices in Asia fall on American stock release plan
SINGAPORE (Reuters): Crude oil prices fell on Monday dampened by news that the United States was looking to release oil from its national stockpile.
News that Iraq's output had dropped as much as 800,000 barrels per day (bpd) did little to shake the bearish mode on the day. March New York Mercantile Exchange (NYMEX) crude futures were last traded at US$27.00 per barrel by 0910 GMT, down 22 cents from New York.
A U.S. Department of Energy official outlined on Sunday a plan to put millions of barrels of crude oil from the country's Strategic Petroleum Reserve (SPR) on the market through an oil swap with energy companies.
Under the plan, oil firms would receive oil from the reserve and replace it at a later date.
The plan was being reviewed by the White House and a decision on the proposal could be made in two weeks.
The official said a maximum four million bpd could be withdrawn from the reserve each day.
If the policy is adopted it could have a significant impact on the U.S. market.
The maximum release from the reserve would be about 20 percent of the U.S.' daily oil consumption of some 19.8 million bpd.
The injection of oil would ease the supply tightness which two weeks ago pushed NYMEX crude prices to $29.95 --the highest level in nine years.
The bearish reaction to the potential release of U.S. stocks was only partly offset by news of export problems in Iraq.
Taha Hmoud, the undersecretary of the oil ministry, said on Monday that crude exports had dropped to as little as 1.5 million bpd, well below the 2.3 million bpd seen in recent weeks.
He blamed the decline on a lack of spare parts and bad weather. The latter has kept the Mina al-Bakr port, used for exports to Asia, closed for four days, he said.
He said that Iraq would observe a ceiling on sales of $5.26 billion despite the fact that the United Nations had effectively removed the limit on sales.
The news continued a spell of mixed signals for the oil market on price direction.
OPEC
OPEC is due to review its policy of supply restraint at a meeting in Vienna starting March 27.
But in the past two weeks it has offered mixed signals on what could happen.
Last week, Mexican Oil Minister Luis Tellez told a conference in Davos, Switzerland that producers would make efforts to ensure that oil supplies were not tight.
But a senior OPEC source countered that, saying key producers were inclined to keep production cuts in place when the accord expires.
Venezuelan oil minister Ali Rodriguez said at the weekend that OPEC could decide to increase oil output if forecast demand materialized in the second half of the year.
OPEC and some non OPEC producers have aimed during the past year to reduce supplies by five million barrels per day.
Relatively tight adherence by OPEC to the agreement has helped draw down world stockpiles to their lowest levels in a decade.
But analysts have warned that an extension of the curbs would lead to a severe supply shortage in the first half of the year.