Brent crude falls on possibility of reserves release

Fri Aug 17, 2012 1:38pm EDT
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By Robert Gibbons

NEW YORK (Reuters) - Brent October crude futures fell 1 percent on Friday on talk of a possible release of U.S. strategic petroleum reserves and expectations that North Sea output will rebound after maintenance curbs production in September.

Front-month U.S. September crude showed resilience, edging up in choppy trade, but gasoline and heating oil futures fell sharply in tandem with Brent's decline.

After the Brent September contract expired on Thursday, October Brent pared gains in post-settlement trading on news the White House was "dusting off old plans" for a potential release of strategic oil stocks.

Brent bounced off lows on Friday when the head of the International Energy Agency said oil markets were currently well supplied and there was no reason for governments to release oil from strategic reserves.

The bounce left Brent on pace for a third straight weekly gain, needing to settle above $112.95 a barrel, while U.S. crude closed in on a 3 percent weekly increase.

Escalating geopolitical tensions over Syria's civil conflict and the dispute over Iran's nuclear program, along with North Sea production curbs and hopes that central banks will provide more stimulus, had combined to pull Brent up since it settled at $89.23 a barrel on June 21.

"The market moved a long way in quite a short time and we are now seeing some profit-taking," said Eugen Weinberg, global head of commodities research at Commerzbank in Frankfurt.

Weinberg said reports of a potential reserve stocks releases could prompt investors to sell long positions, lowering prices.   Continued...

An attendant prepares to refuel a car at a petrol station in Rome January 4, 2012. REUTERS/Max Rossi