June 23 (Bloomberg) -- Oil tumbled to the lowest price in four months after the International Energy Agency said its members would release crude from strategic reserves.
Oil fell as much as 6 percent as the agency announced the release of 60 million barrels to help make up for a Libyan supply disruption. The IEA said 2 million barrels a day would be available in the first 30 days. Commodities and equities tumbled after U.S. jobless claims rose last week and the Federal Reserve cut its economic growth outlook yesterday.
“The big driver is the IEA number,” said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania. “There’s been a constant string of negative news about the economy and a lack of direction from Washington, which makes for a very volatile market.”
Oil for August delivery dropped $4.76, or 5 percent, to $90.65 a barrel at 10:09 a.m. on the New York Mercantile Exchange. Earlier, futures touched $89.69, the lowest level since Feb. 22. Prices have gained 19 percent in the past year.
Brent crude for August delivery fell $6.81, or 6 percent, to $107.40 a barrel on the London-based ICE Futures Europe exchange. Prices have risen 41 percent in the past year.
Brent may “stabilize” around $90 a barrel for the rest of 2011 following the IEA release and increased output from Saudi Arabia, Kuwait and the United Arab Emirates, according Citigroup Global Markets Inc. analysts Edward Morse and Aakash Doshi.
It’s only the third time in the history of the IEA the reserve has been tapped. The first was during the 1991 Persian Gulf War, and the second was after Hurricane Katrina in 2005. The Paris-based IEA is an energy policy adviser to 28 industrialized nations including the U.S., Japan and Germany.
Jobless Claims
Prices also fell after the U.S. Labor Department said applications for jobless benefits increased 9,000 in the week ended June 18 to 429,000. The level of claims exceeded the highest estimate in a Bloomberg News survey in which the median projection called for 415,000 filings.
Fed officials yesterday cut their forecasts for growth and employment this year and next, and an Energy Department report showed U.S. oil stockpiles fell less than forecast and inventories at Cushing, Oklahoma, the delivery point for the New York-traded West Texas Intermediate grade, increased for the first time in four weeks.
The Thomson Reuters/Jefferies CRB Index of 19 commodities declined 3.1 percent to 327.46, the biggest drop since May 5. All 19 of the commodities retreated.
The Standard & Poor’s 500 Index tumbled 1.4 percent to 1,269.04, and the Dow Jones Industrial Average fell 183.11 points, or 1.5 percent, to 11,926.56.
