The Dow Jones industrial average fell sharply and energy stocks declined more than 2 percent on Wall Street on Thursday after a report that the United States would release some oil from its Strategic Petroleum Reserve. Crude oil prices also fell.þþThe International Energy Agency announced in Paris on Thursday that the United States will release half of the 60 million barrels of petroleum reserves to world markets, with other nations releasing the rest, replacing some of the oil production lost due to the conflict in Libya.þþShortly after the market opened, the Dow Jones industrial average dropped more than 200 points, or 1.58 percent The Standard & Poor’s 500-stock index fell 17.78 points, or 1.38 percent, and the Nasdaq composite average fell 34.88 points, or 1.31 percent.þþEuropean markets were also down more than 1 percent. Concerns about the Greek debt troubles have also continued to weigh on the markets.þþ“It has clearly had a huge impact on crude oil prices,” said Keith B. Hembre, the chief economist and chief investment strategist at First American Funds of Minneapolis.þþThe euro shot higher and the dollar weakened, but that trend started to reverse.þþ“There is probably greater concern around the European situation,” he added.þþOil prices have risen 25 percent in the last year, propelled by turmoil in the Middle East and North Africa and tightening oil markets.þþAfter the IEA report, the benchmark light sweet crude oil in the United States fell $4.86 a barrel to $90.55. Prices had been declining before the announcement, apparently on speculation of the move.þþThe IEA report comes after Saudi Arabia decided to raise production to meet rising global demand, or to 10 million barrels a day in July from 9.3 million barrels. Saudi Arabia took the decision, according to the Saudi newspaper Al-Hayat, after a meeting of the Organization of Petroleum Exporting Countries earlier this month at which delegates refused to raise official production levels.þþConcerns about a weakening economy have also sent prices lower in recent weeks, and on Wednesday they declined further in New York trading after the Federal Reserve said it would complete its purchases of $600 billion in United States Treasuries next week as planned.þþThe Fed also said the economy was not expanding as quickly as predicted, saying it expected a growth rate of 2.7 percent to 2.9 percent in 2011, and 3.3 percent to 3.7 percent in 2012.þþInvestors are anticipating that slower growth could lead to reduced demand for fuel.þþIn addition, the financial markets fielded more statistics on the jobs market in the United States.þþThe Labor Department said on Thursday that initial unemployment claims were up 9,000 to 429,000 as of last week, according to seasonally adjusted figures. It was above analysts’ forecasts of 414,000.þþThe report also reflected a revision of 420,000 for the previous week from an initial report of 414,000.þþThe four-week moving average, which is intended to smooth out the data, was steady at 426,000 as of the week ending June 18.þþBut the Labor Department noted that computer problems hindered the accounting of the numbers in reports from six states, which estimated their figures.þþIn addition, the Treasury market traded higher on Thursday as investors digested the news from the Fed on the slower growth and as new continued to filter out from Europe.
Source: NY Times
