Oil prices fell below US$67 a barrel in Asian trade yesterday as industrial powers pledged to release emergency reserves of crude, easing worries of tight supplies in the aftermath of Hurricane Katrina, dealers said.
At 3:30pm, New York's main contract, light sweet crude for delivery in October, was down US$0.79 to US$66.78 from its close of US$67.57 in the US on Friday.
Markets in the US were closed on Monday for the Labor Day holiday.
Japan yesterday announced it would release 7.3 million barrels of private-sector oil reserves to markets in the coming month, following an agreement by the International Energy Agency (IEA) last week that member states will tap into their strategic reserves to cope with disruptions caused by Katrina.
Japan's government holds oil reserves equivalent to consumption for 91 days.
Dealers said the IEA announcement last Friday that all its 26 members will pour 60 million barrels of oil into the global market for an initial 30 days to deal with the supply shock calmed supplies worries after Katrina slammed into the Gulf of Mexico, a key US oil producing region.
"The IEA efforts will include both crude oil stocks and product stocks like gasoline," said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore.
He said the immediate impact was that "the speculative element has been taken out of the market for now ... so prices have been dropping."
The Paris-based IEA said all its 26 member states had agreed to take "collective action in response to the interrupted oil supplies in the Gulf of Mexico caused by Hurricane Katrina."
The IEA also said it had consulted with major producers and the president of the Organization of Petroleum Exporting Countries, which have also committed to make incremental oil available to the market.
The US government has already released 9 million barrels of oil from its strategic reserves to oil companies battling to replenish refineries on the Gulf Coast.
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