Oil near $105 amid possible reserves release

Associated Press SHARE

By ALEX KENNEDY, Associated Press

SINGAPORE (AP) — Oil hovered above $105 a barrel Thursday in Asia, capped by the possible release of crude reserves by Western nations.

Benchmark oil for May delivery was up 4 cents to $105.45 at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $1.92 to settle at $105.41 per barrel in New York on Wednesday.

Brent crude for May delivery was steady at $124.16 per barrel in London.

France said Wednesday it was considering a release of emergency crude stockpiles as part of a U.S.-led effort to lower oil prices. Government spokeswoman Valerie Pecresse said France is waiting for recommendations from the International Energy Agency before tapping its reserves.

U.S. officials denied a report several weeks ago that said the U.S. and Britain were planning a coordinated reserves release. On Wednesday, White House spokesman Josh Earnest declined to say whether the U.S. had asked France to consider releasing oil from its strategic reserves.

A large jump in U.S. crude supplies also weighed on oil prices. The Energy Department's Energy Information Administration said Wednesday that crude inventories soared 7.1 million barrels last year, more than double the amount forecast by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos.

Fears that a military attack by Israel or the U.S. on Iran's nuclear facilities would disrupt global crude supplies has helped raise oil from $75 in October. Analysts worry that a further spike in crude prices will spark inflation and hurt consumer spending.

Fitch Ratings estimates that if Brent averaged $150 this year, it would cut global economic growth by 0.4 percent in 2012 and 2013.

"Inflation would substantially increase, eventually depleting household income levels and consumption," Fitch said in a report.

Natural gas prices fell to a 10-year low amid a glut of U.S. supplies. Some analysts say the U.S. could soon run out of natural gas storage space.

"The question at this point is not whether U.S. natural gas prices can trade below $2 but for how long they could stay there," Bank of America Merrill Lynch said in a report. "With inventories so extremely high and building, we remain bearish natural gas prices this summer."

In other energy trading, heating oil was up 0.2 cents at $3.22 per gallon and gasoline futures rose 1 cent at $3.37 per gallon. Natural gas dropped 1.3 cents at $2.27 per 1,000 cubic feet.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.