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 By early afternoon in Europe, benchmark oil for August delivery was
up 63 cents to $91.65 a barrel in electronic trading on the New York
Mercantile Exchange.
In London, Brent crude for August delivery was down 36 cents to
$106.90 a barrel on the ICE Futures exchange.
Nymex crude fell $4.39 to settle at $91.02 on Thursday after the
International Energy Agency said it will make 60 million barrels
available over a 30-day period, half of which will come from the
U.S. Strategic Petroleum Reserve.
Analysts said the move likely reflected increasing concern that the
global economy is slowing, and that high oil prices boost inflation
and dampen consumer demand.
"We think the IEA did the right thing, since we believe that world
economies were on the verge of a dangerous energy-induced slowdown,
if not an outright recession," said Edward Meir at MF Global in New
York.
"Breaking the back of this price spiral was therefore important in
so far as some of the recent inflationary gains will now likely be
reversed — assuming energy prices continue trending lower — while
more importantly, central banks in key emerging markets will be less
inclined to raise rates."
Earlier this week, Federal Reserve Chairman Ben Bernanke warned that
the U.S. economy is weaker than previously forecast, and lowered
this year's gross domestic product growth estimate to 2.9 percent
from 3.3 percent.
The IEA move "may ease tightening demand-supply concerns and result
in further downside pressure in oil prices in the near-term," ANZ
bank said in a report. "The softening of oil prices may be a
significant plus to boost global economic growth through the second
half of the year."
The release of reserves also comes after OPEC decided against
boosting its production quotas at a meeting earlier this month.
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 Some observers were puzzled by the timing of the IEA move since
crude had already fallen from near $115 on May 2 and Libya's 1.6
million barrels a day of oil output have been shut down since
February.
"The IEA's announcement appears to be nothing more than a well-timed
public relations stunt designed to punish speculators," said Richard
Soultanian of NUS Consulting. "The impact will be short-lived and
the markets will quickly revert back to the pattern they have been
following for the past months, which is closely following movements
in the U.S. dollar."
When the dollar gains, crude tends to fall because a stronger U.S.
currency makes commodities such as oil more expensive for investors
with other currencies. When the dollar weakens, crude prices usually
go up.
The euro was down at $1.4205 on Friday but that was still higher
than the recent low recorded Thursday, when investors' appetite for
risk was battered.
In other Nymex trading in July contracts, heating oil rose 2.18
cents to $2.8035 a gallon while gasoline dropped 1.22 cents at
$2.8254 a gallon. Natural gas futures fell 0.6 cent at $4.187 per
1,000 cubic feet.
[Associated
Press; By PABLO GOROND]
Alex Kennedy in Singapore contributed
to this report.
Copyright 2011 The Associated Press. All rights reserved. This
material may not be published, broadcast, rewritten or
redistributed.
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