IEA makes 60 million barrels of oil available to market to offset Libyan disruption
International Energy Agency Executive Director Nobuo Tanaka announced today that the 28 IEA member countries have agreed to release 60 million barrels of oil in the coming month in response to the ongoing disruption of oil supplies from Libya. press release…Key questions…See the video of the press conference…Audio recording of technical briefing to journalist …
June 24, 2011
Banks revise oil price forecast
SINGAPORE: Banks have slashed their short-term forecasts for oil prices after the International Energy Agency (IEA) said it will be increasing global oil supply.
The IEA announced Thursday it would release 60 million barrels of oil over a 30-day period.
But analysts said they expect the impact of this to be short-lived.
Following IEA's decision to release strategic government stockpiles of oil, Brent crude oil prices fell more than US$6 a barrel, to below US$108.
Banks, such as UBS and Goldman Sachs, have slashed their three-month price target for oil prices by about US$10 per barrel.
But most analysts maintained their 12-month forecast of oil prices, predicting that oil prices will start to rise again in the third quarter.
SIAS Research investment analyst Ng Kian Teck said: "The oil price will probably come down, probably towards the $90 dollar level, but that will be short term.
"We don't reckon that there will be a significant impact in the long run. Going forward, we still maintain our forecast that oil price will probably move towards the $100 dollar level by the end of the year".
The 28-member IEA said the move was to fill the gap in oil supply due to the disruptions to Libya's output.
Analysts took issue with this justification because the conflict in Libya erupted some four months ago.
They said it is odd that this move coincided with the ending of Quantitative Easing 2, (QE2) in the US.
UBS Wealth Management head of commodity research Dominic Schnider said: "I would say it's politically motivated, because crude oil prices were already peaking, and Saudi Arabia said it would increase considerably its production towards 10 million barrels a day.
"So there was actually no necessity to do that stock sales. It's kind of a stimulus to the economy, which we have seen recently struggling to see good numbers".
Analysts believe emerging Asia with its inflationary pressures will benefit greatly from the lower oil prices.
Globally, this is expected to boost the oil-dependent sectors of the economy, such as aviation and manufacturing.
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