Oil Plunges $6 Following International Energy Agency Pledge to Release 60 Million Barrels from Strategic Stockpile

A triple whammy hit commodities today and sent the US dollar up sharply against the Euro and other currencies.

1. Trichet admits the Obvious: "Risk Signals Are Flashing Red"; Ireland Snubs ECB With Renewed Threat to Bank Bondholders
2. US unemployment weekly claims came in higher than expected
3. International Energy Agency said 60 million barrels of oil would be released from strategic stockpiles

Please consider Oil tumbles as U.S., IEA release oil stocks

Oil fell sharply on Thursday, with North Sea Brent down more than $6 per barrel, after the International Energy Agency said 60 million barrels of oil would be released from strategic stockpiles to help the global economy.

The announcement comes after OPEC failed to raise production at a meeting on June 8 and despite assurances from OPEC's biggest producer Saudi Arabia that it would lift supplies unilaterally.

"Greater tightness in the oil market threatens to undermine the fragile global economic recovery," the IEA said.

The IEA said it would release 2 million barrels per day (bpd) over 30 days onto the world market to fill the gap in supplies left by the disruption to Libya's output. Libya was exporting about 1.2 million bpd.

Analysts and traders said they had not expected the move:

"I'm really surprised. Everyone's been saying they've got enough stocks. This should keep WTI (U.S. crude) under the $100 (per barrel), but really we want Brent there, and this should help," said Robert Montefusco, broker at Sucden Financial.

Energy Futures as of 2011-06-23 9:30 US Central



Mike "Mish" Shedlock
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