Thursday June 23, 2011

Crude oil prices plunge as 28 countries release supply from strategic reserves

usatoday.com, beta.news.yahoo.com :

Crude oil prices tumbled Thursday [23 Jun 2011] on fresh news of US economic weakness and a pledge by 28 countries to release 60 million barrels of oil from strategic reserves. NYMEX crude oil prices for Aug 2011 delivery fell almost $5 a barrel to around $90.51 a barrel. Wary of a new surge in gas prices, the Obama administration decided to release 30 million barrels of oil from the country's emergency reserve as part of a broader international response to lost oil supplies caused by turmoil in the Middle East and North Africa, particularly Libya. Oil's most recent high was $113.93 a barrel in Apr 2011. Stocks fell sharply on news of a rise in initial unemployment claims with the Dow Jones industrials off 200. Oil companies from BP in Britain to Total in France and ExxonMobil in the US were all marked down heavily in the wake of the oil news, adding to the already depressed mood in stock markets.

- Apparently these people are trying to prevent another 2008-style meltdown by moving quickly to douse the fumes on simmering inflation before it becomes a roaring inferno and leads to another price run and subsequent crash. The other indicators included the raising of margin requirements in the futures markets just a few weeks back. But strategic petroleum reserves are only meant to be a short-term solution. This whole thing smacks of an attempt to manage the markets by government control. It might work for a while in the short term. Me, I would just like to thank the 28 countries for another buying opportunity to go long crude oil.

See also :

1. ASEAN, China, Japan, South Korea mull oil stockpile
2. China's first strategic oil reserve facility to be ready in August
3. China strategic oil reserve second phase building starts

(2011-06-23 23:36:32 SGT) [Energy] Permalink

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