LONDON, 7 September 2005 — Oil prices recovered slightly in London yesterday after sharp falls in recent days in response to an agreement among industrial powers to release emergency reserves of crude in the wake of Hurricane Katrina.
However the price of New York’s main oil contract fell heavily as US traders aligned themselves with price changes elsewhere while they were absent for a long holiday weekend because of Labor Day in the United States.
New York’s main contract, light sweet crude for delivery in October, dropped by $1.27 to $66.30 per barrel in early dealing from Friday’s closing value. The price of Brent North Sea crude for October delivery gained 21 cents to $65.06 from Monday’s close. Brent had lost about $3.0 over Friday and Monday after the International Energy Agency (IEA) said its members would release 60 million barrels of crude products over an initial period of 30 days.
“New York was on holiday yesterday and we saw the beginning of a sell-off Friday afternoon after the IEA had announced measures to try and dampen prices by releasing stocks and we’ve seen a continuation of that when the States reopened,” one London trader said.
Yesterday, Japan said it would release 7.3 million barrels of private sector oil reserves to markets in the coming month, following the IEA’s agreement Friday that aims to ease supply concerns after Katrina severely disrupted oil production in the Gulf of Mexico. However some analysts believed the IEA’s move would do little to solve supply shortages.
