Crude (NYSE:USO) futures plummeted this morning 4.95% to $90.69 a barrel after the International Energy Agency announced they would release 60 million reserve barrels into the world markets to counteract supply disruptions in the Middle East and especially Libya. Half of the barrels released will come from the U.S. Strategic Petroleum Reserve, which currently holds 727 million barrels, the world’s largest single stockpile. This marks the third time in its nearly 40-year history that the U.S. reserves have been tapped, happening this time in large part because the current instability of the global economic climate cannot handle rising gas prices.
After spiking to over $100 earlier this month after OPEC failed to raise production, oil was already on the decline this week with Ben Bernanke’s speech on the economy Wednesday painting a dismal picture of the coming year. The Labor Department’s disappointing report on jobless claims only pushed prices down further. And today witnessed the release of negative home sales data. The IEA’s news might be just what people need to counteract some of the negative information that’s been piling up of late. Oil (NYSE:OIL) prices are already dropping around the country just with the news.
Also on the decline are natural-gas (NYSE:UNG) futures after this week’s U.S. Energy Information Administration reported an increased inventory of 98 billion cubic feet last week, higher than Platts analyst expectations of 87-91 billion cubic feet. Natural gas for July deliver has dropped 2.64%, July heating oil futures have dropped 4.43% to $2.81 a gallon, and July gasoline futures are down 4.33% to $2.83 a gallon.
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