Oil prices fell by more than a dollar on Friday as Europe prepared to tap up to two million barrels a day of emergency reserves to help ease a fuel crisis threatening the United States.
It would take at least 10 days for European gasoline to reach the United States once a decision is taken. Europe has already booked up to 30 cargoes of petrol to move to the United States, prompting brokers to warn of an impending shortage.
German Chancellor Gerhard Schroeder said a release of two million bpd for 30 days was under consideration.
The Paris-based IEA says it is still consulting members and awaiting a report on the extent of Katrina's damage to U.S. Gulf refiners before deciding on a stock release.
According to the
Minerals Management Service, there are 1,356,498 BOPD shut-in. Shut-in is an industry term for "not producing." I am assuming BOPD = Barrels of Production/day, although I am not certain on that. If that is correct, than the European response of a proposed 2 million barrels per day will make-up for lost gulf production in the short term.
The market has sold-off on the news. While that of course could change, it is the first sign of meaningful relief in the markets this week.