Friday, Aug 17, 2012

--Oil futures fall after reaching fresh three-month highs Thursday

--Talks around whether US will release oil from reserves pressure prices

--Many analysts doubt the release will happen

 

   By Konstantin Rozhnov 

 

LONDON--Crude-oil futures fell Friday after the Brent crude front-month rollover and amid speculations that the U.S. may be considering an oil release from its Strategic Petroleum Reserve.

At 1059 GMT, the front-month October Brent contract on London's ICE futures exchange was $1.42, or 1.3%, lower at $113.85 a barrel. The front-month September contract on the New York Mercantile Exchange was outperforming Brent, trading down 47 cents, or 0.5%, at $95.13 per barrel.

October Brent became the front-month contract after the September contract expired Thursday at a premium of over $2 a barrel to the October contract, reaching the new three-month closing high of $116.90 a barrel.

September Brent had been strongly supported by a planned sharp drop in North Sea crude output due to field maintenance in September, but market participants expect the supply tightness to ease significantly in October.

Meanwhile, investors and analysts are focusing on reports of the U.S. looking again into whether oil from its Strategic Petroleum Reserve should be released. Many analysts doubt that such a release will actually take place.

The decision should be made based on scarcity of crude oil supply, even if prices remain high, said Eugen Weinberg, head of commodities research at Commerzbank.

"There is no scarcity so it is very difficult to justify such a move," he added, noting that previous attempts to use a stock release to bring down prices proved unsuccessful.

Still, discussion and rhetoric around the subject could help pressure oil futures, said Mr. Weinberg.

"Overall, the White House has started verbal intervention, that might bring some reduction of bullish exposure and profit-taking on flat price and on the time-structure of crude oil, but it will not be a long-lasting solution to wars on oil producing countries and liquidity injections," said Olivier Jakob, managing director of Swiss consultancy Petromatrix.

At 1059 GMT, the ICE's gasoil contract for September delivery was up $1.00, or 0.1%, at $978.25 per metric ton, while Nymex gasoline for September delivery was 336 points, or 1.1%, lower at $3.0496 per gallon.

-Write to Konstantin Rozhnov at konstantin.rozhnov@dowjones.com

(Sarah Kent in London contributed to the article.)

(END) Dow Jones Newswires

August 17, 2012 07:43 ET (11:43 GMT)