Oil declined as France said governments are moving closer to an agreement on a release of barrels from emergency stockpiles to curb price gains and U.S. equities declined.
Futures dropped as much as 1.2 percent after French Prime Minister Francois Fillon said the prospects of an accord between the U.S. and Europe on tapping strategic reserves are good. Equities opened lower on Standard & Poor’s statement that Greece may have to restructure its debt again and as concern grew about China’s economy.
“There are worries about the release of Strategic Petroleum Reserves putting some downward pressure on the market,” said Tom Bentz, a director with BNP Paribas Prime Brokerage Inc. in New York.
Crude oil for May delivery dropped $1.08, or 1 percent, to $104.33 a barrel at 10:12 a.m. on the New York Mercantile Exchange. Prices are up 5.6 percent this year and set for a second quarterly gain.
Brent oil for May settlement decreased 75 cents to $123.41 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $19.08 to the West Texas grade. The gap was $18.75 yesterday, the widest based on closing prices in two weeks.
No ‘Miracles’
Consumers can “reasonably expect” a reserve release, Fillon said told France Inter Radio today. He said not to expect any “miracles” in reducing oil prices.
Yesterday, Industry Minister Eric Besson said the U.S. government had proposed a release, and Budget Minister Valerie Pecresse said France was waiting for a report from the International Energy Agency before making a decision.
The IEA, the energy adviser to 28 countries, coordinated the sale of 60 million barrels of crude and refined products last year after supplies from Libya were disrupted.
U.S. President Barack Obama and U.K. Prime Minister David Cameron discussed the move earlier this month. France will use its oil reserve only in coordination with other countries, Finance Minister Francois Baroin said on Europe 1 radio.
The Obama administration hasn’t made a decision and no specific action has been proposed, Josh Earnest, deputy White House press secretary. The option “remains on the table,” he said yesterday.
Oil has gained this year on speculation Western sanctions aimed at halting Iran’s nuclear program will disrupt Middle East shipments. Negotiations on the nuclear program will resume next month, the Persian Gulf nation’s foreign minister said.
U.S. crude oil stockpiles rose 7.1 million barrels in the week ended March 23 to 353.4 million, the highest level since Aug. 26, the Energy Department report showed. Gasoline inventories fell 3.54 million barrels to 223.4 million.
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