OIL prices fell slightly yesterday following some early drama in the market when the White House was forced to deny a report that it is preparing to release crude from emergency reserves in coordination with Britain.
Prices dropped nearly US$2 over 15 minutes around midday on a report that the US and the UK had agreed to release oil supplies on the market.
Despite the denial, traders said it's still possible that Western nations will engage at some point in a joint release of supplies, as they did last summer.
"Where there's smoke, there's fire," independent trader and analyst Jim Ritterbusch said of the reports.
The goal of such a move would be to drive down oil prices. The US benchmark oil has risen about 7 percent this year while international crudes have gained even more. High oil and gasoline prices threaten to crimp consumer spending and hurt businesses.
Benchmark West Texas Intermediate crude dropped 32 cents to end the day at US$105.11 per barrel in New York. Brent crude fell US$1.42 to finish at US$123.55 per barrel in London.
Oil has risen primarily because of tensions between the West and Iran over that country's nuclear program. Iran exports about 2.2 million barrels of oil a day. The Society for Worldwide Interbank Financial Telecommunication, or SWIFT, said it would cut ties with Iranian banks to back European Union sanctions against Tehran.
SWIFT is a secure private network used by nearly every bank around the world to send payment messages to each other that then lead to the transfer of money across international borders. yesterday's action could hinder Iranian oil sales. Even so, veteran traders suspect Iran will find ways to export its oil.
"They're going to sell because they have to," independent oil analyst and trader Stephen Schork said. "Whether they get paid through SWIFT or with barges filled with gold, they're going to do it."
Oil briefly dropped near US$104 per barrel around midday as several news organizations reported that President Barack Obama and British Prime Minister David Cameron had agreed to release spare supplies of oil in an effort to drive fuel prices lower. The increase in oil prices has pushed diesel prices 3 percent higher in the United Kingdom and gasoline prices 17 percent higher in the US
White House press secretary Jay Carney said the US regularly consults with the British on energy issues, but he said there was no plan to release supplies.
"It is inaccurate as was reported today that any kind of agreement was reached on a course of action," Carney said.
Natural gas prices held near a 10-year low after the government said US supplies are nearly 52 percent higher than the five-year average following a production boom and a relatively warm winter. Natural gas futures slipped 0.05 cent to end at US$2.279 per 1,000 cubic feet.
In other energy trading, heating oil fell by 3.88 cents to end at US$3.223 per gallon while gasoline futures gave up 5.8 cents to end at US$3.289 per gallon.