The U.S. Department of Energy said it will release 30 million barrels of oil from the Strategic National Reserve to alleviate Libyan oil supply disruptions, in the midst of already-plummeting oil prices.
The U.S. release is part of a 60 million barrel increase in supply announced Thursday by the International Energy Agency, which includes the U.S. as one of its 28 member nations, "in response to the ongoing disruption of oil supplies from Libya."
The U.S. Energy Department said the reserve is at the "historically high level" of 727 million barrels.
"We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries and their impact on the global economic recovery," said Energy Secretary Steven Chu. "As we move forward, we will continue to monitor the situation and stand ready to take additional steps if necessary."
Meanwhile, Libya is still locked in civil war, as rebels aided by NATO airstrikes try to unseat Mohammar Gadhafi.
Oil prices fell more than 4.5% Thursday, as investors signaled disappointment over a bummer of a speech by Fed chief Ben Bernanke.
Oil prices plunged $4.71 to $90.89 per barrel. Prices edged down about 1.5% in Wednesday's session following Bernanke's speech.
Federal Reserve Chairman Bernanke issued a gloomy forecast of the economy on Tuesday, triggering a stock decline of 0.7% on Wall Street.
"Bernanke's statement about the 'slowing pace of recovery' was the key to this down move," said Dan Dicker, former oil trader and author of "Oil's Endless Bid: Taming the Unreliable Price of Oil to Secure Our Economy."
Fed Reserve gloomy on economy
In particular, he highlighted the stagnant job market and the potential impact of the Greek fiscal crisis. He projected that unemployment would "come down very painfully and slowly."
Dicker said that oil prices were also "under pressure from growth slowdowns."
Tom Kloza, chief oil analyst for the Oil Price Information Service, said the increasing value of the U.S. dollar is also "putting downward pressure on oil."
He also said, "The oil futures markets is dominated by the huge institutional money managers who move tens of millions of dollars moment by moment in and out of positions in crude. Since about 3 p.m. yesterday [Wednesday] afternoon, they have been liquidating their long positions."
