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Follow on Google News | IEA Keeps Oil Down In Shock MoveThe International Energy Agency, a coalition of oil-importing nations, announced plans to release 60 million barrels of crude from emergency stockpiles over the next month, shocking traders and slashing prices, especially for light sweet oil.
The move shocked traders who had been expecting the IEA to give top exporter Saudi Arabia more time to make up for the supply shortfall following OPEC's failed meeting on June 8, when other members blocked Gulf efforts to hike output. Goldman Sachs, whose oil price forecasts are closely watched by markets, said the release of the IEA oil could knock prices for Brent crude down by $10 to $12 a barrel. The IEA release, at 2 million barrels per day (bpd) over the next 30 days, is more than the daily loss of Libya's 1.2 million bpd exports and comes despite a broad view that the world is not now short of crude -- although many analysts and agencies also agree that markets will tighten later this year. The release includes 30 million barrels of light, sweet crude from the U.S. Strategic Petroleum Reserve -- the same quality that markets have lost due to the Libya disruption. Brent crude futures for August plunged by more than $8 after the news, before settling at a four-month low of $107.26 a barrel, down $6.95 for the day. Bankers J.P. Morgan and Goldman Sachs slashed forecasts for crude prices in the third quarter after the International Energy Agency announcement. J.P. Morgan cut its average forecast for Brent crude to $100 a barrel in the third quarter, down from its previous projection of $130. Goldman Sachs , one of the most influential banks in commodities, expects Brent prices to fall to $105-$107 a barrel by the end of July. The Iranian governor for OPEC, Mohammad Ali Khtatibi has said IEA’s decision to draw oil from its emergency reserves implies intervention in the ordinary function of the oil market, and the trend of falling oil prices will not be sustainable. Oil markets were already down sharply ahead of news of the release, due to worries over global fuel demand following higher-than- # # # About Southeast Asian Ethanol: Southeast Asian Ethanol is a private group dedicated to supporting the development of localized sugar cane based ethanol production throughout the Asian Region. End
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