Oil prices rose to above $92 a barrel Friday in Asia, clawing back some of the previous session's big losses as investors mulled the impact of the IEA's release of emergency crude supplies.
Kuwaiti MP Khaled al-Tahus speaks to the press at the national assembly in Kuwait City, May 2011
>> Oil rebounds as markets await IEA emergency stocks
Benchmark oil for August delivery was up $1.16 to $92.18 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. In London, Brent crude for August delivery was up 99 cents to $108.25 a barrel on the ICE Futures exchange.
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 exacerbate quickening inflation and tepid consumer demand.
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 per cent from 3.3 per cent.
The release of reserves also comes after OPEC declined to boost its production quotas at a meeting earlier this month.
Some observers were puzzled by the timing of the 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 steady at $1.4257 on Friday after dropping Thursday.
In other Nymex trading in July contracts, heating oil rose 4.1 cents to $2.82 a gallon while gasoline gained 2.5 cents at $2.86 a gallon. Natural gas futures added 1.1 cents at $4.20 per 1,000 cubic feet.