Oil price falls again as reserves released

The price of oil fell nearly five per cent yesterday after the International Energy Agency said it will release 60 million barrels of oil from its reserves to make up for a loss of Libyan exports in global oil markets.

The IEA, which includes the US, will release two million barrels per day over the next 30 days.

Half of that will come from US Strategic Petroleum Reserve, which holds 727 million barrels in underground caverns along the Gulf Coast.

The IEA said the oil will help offset the loss of about 132 million barrels of high-quality Libyan crude, cut off by continuing unrest there.

“Although there are huge uncertainties, analysts generally agree that Libyan supplies will largely remain off the market for the rest of 2011,” the agency said.

Benchmark West Texas Intermediate for August delivery lost $4.59, or 4.8 per cent, at $90.82 dollars per barrel in midmorning trading on the New York Mercantile Exchange.

Brent crude, which is used to price many international varieties, lost $6.78, or 5.9 per cent, at $107.39 per barrel on the ICE Futures exchange.

The 28-member IEA said that the loss of Libya’s 1.5 million barrels of daily exports has squeezed oil supplies to the point that it now threatens to “undermine the fragile global economic recovery.”