Oil price drops more than 2% on talks over diesel, crude stock releases

Business Recorder reported that oil benchmarks slid more than 2% on Friday after reports of talks on extra diesel and crude stock releases eased worries about tight global supplies. By 1035 GMT, Brent had lost $2.57 to $99.74 a barrel, while West Texas Intermediate fell $3.53 to $89.34, a drop of 3.8%. European gasoil futures, the benchmark for diesel prices, dropped about 5% to $1,380.5 a metric ton.

Both main crude contracts were set for weekly losses, with Brent about 4.1% lower and WTI roughly 3.2% down so far this week. EU governments discussed a French plan under which European countries would free 50 million barrels of diesel and International Energy Agency members would make available 50 million barrels of crude, according to a Reuters source. The talks followed US pressure on European nations to free up more supplies and curb rising fuel prices.

Saxo Bank's Ole Hansen said the main strain in energy markets had shifted from crude availability to refined products, held back by lower refinery output in the Middle East and Russia. Capital Economics' Hamad Hussain suggested that a further draw on oil reserves might push the market into a modest surplus if Middle East flows keep recovering. Barclays, however, said physical fundamentals remained strong, with inventories still being drawn.