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Big appetite for SPR, IEA says

July 14, 2011 at 6:48 AM   |   Comments

PARIS, July 14 (UPI) -- The appetite for oil from strategic reserves is greater than U.S. when refiners were affected by Hurricane Katrina in 2005, the IEA said.

The International Energy Agency last month called on its members to release oil from their strategic reserves to offset production disruptions from war-torn Libya. The IEA in a commentary said it was "compelled" to defend the action against complaints the move was motivated by price.

The IEA reaction in June came after the Organization of the Petroleum Exporting Countries left official production quotas set in 2008 in place. OPEC's decision came amid concerns that high energy prices would drag on economic recovery.

OPEC in its July report said concerns about the pace of U.S. economic recovery dragged on the market.

"In the case of crude oil, anticipation of more supplies from some Middle Eastern countries first, and then from IEA strategic stocks, helped to put downward pressure on prices," the OPEC report stated.

The IEA said it would've been tempted to intervene in February when the Libyan conflict erupted had its action been motivated by price control. Action from its members, the IEA said, was about providing short-term liquidity to the market.

The U.S. Energy Department announced this week that it given 28 contracts to 15 companies for the full release of 30.64 million barrels of oil from the Strategic Petroleum Reserve.

"Market appetite for the oil made available so far (from strategic reserves) has been greater than during the Katrina action of 2005," the IEA said.

Hurricane Katrina closed 95 percent of crude oil production in the United States, prompting a release for the SPR.

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