Oil rebounds as markets await IEA emergency stocks

SINGAPORE (Reuters) - Brent crude rebounded by more than $1 from a four-month low on Friday as traders and investors attempted to gauge the actual impact a release of emergency oil stockpiles coordinated by the International Energy Agency will have on supplies.

August Brent rose $1.20 to $108.46 a barrel by 0056 GMT after a 6 percent drop on Thursday, when the IEA announced the release. U.S. crude climbed $1.24 to $92.26.

J.P. Morgan cut its Brent forecast for the third quarter to $100 a barrel from $130, but warned that "if consuming countries find little appetite for their petroleum release, or find it is having too large an effect on prices, they can limit the volumes sold."

Most of the IEA decision's impact on price is related to the partial removal of a risk premium of about $15 factored into prices because of unrest in North Africa and the Middle East, said Ben Westmore, a commodities analyst at National Australia Bank.

"I don't think the fundamental game has changed too much, and given the big drop we saw yesterday, some marketers are fearing the same and buying on the weakness," Westmore said.

"If you look at the world at an aggregate level, there is no doubt that, while there are pockets of tightness, there are sufficient supplies to meet demand at the moment."

The IEA said it would make available 60 million barrels of government-held stocks in the global market, immediately increasing world supply by some 2.5 percent for the next month, and sending prices spiraling down, with U.S. crude erasing all of the year's gains.

The move shocked traders who had been expecting the IEA to give top exporter Saudi Arabia more time to make up for the supply shortfall following OPEC's failed meeting on June 8, when other members blocked Gulf efforts to hike output.

Venezuela sees no long-term impact on oil prices from the IEA stockpile release, saying it was a political decision linked to elections in the United States and Europe.

Goldman Sachs, whose oil price forecasts are closely watched by markets, said the release of the IEA oil could knock down prices of Brent crude by $10 to $12 a barrel.

On Thursday, Brent trade volumes surged to a record high, hitting 1.15 million lots trading in late activity, nearly 2-1/2 times the 30-day average. U.S. volume topped 920,000 lots traded, 30 percent over the 30-day average.

Oil markets were already down sharply ahead of news of the release, due to worries over global fuel demand following higher-than-expected U.S. jobless claims, forecasts of lower U.S. growth from the Federal Reserve and evidence of a slowdown in Chinese manufacturing.

The IEA release, at 2 million barrels per day (bpd) over the next 30 days, is more than the daily loss of Libya's 1.2 million bpd exports and comes despite a broad view that the world is not now short of crude -- although many analysts and agencies also agree that markets will tighten later this year.

The release includes 30 million barrels of light, sweet crude from the U.S. Strategic Petroleum Reserve -- the same quality that markets have lost due to the Libya disruption.

Against that backdrop, analysts said the use of the reserves now -- unlike the previous two releases, which immediately followed the first Gulf War and Hurricane Katrina -- signaled the IEA may have been more concerned with tempering prices to aid a faltering economic recovery.

J.P. Morgan analysts said the offer of strategic oil inventory "should be seen not only as a stop-gap due to insufficient global supply, but also as an injection of stimulus into the world economy, and result in a significant shift in world oil pricing dynamics in the third quarter."

(Editing by Clarence Fernandez)

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