The US and Europe are releasing more emergency crude oil than refineries in the Gulf of Mexico can handle, reinforcing suspicions that governments are using the crisis triggered by Hurricane Katrina to cap record oil prices.
US refineries will on Friday begin to bid for the 30m barrels of crude oil that the US government is releasing from the its emergency reserves but, with many refineries disabled, analysts say the additional supply may not be needed.
“I will not be surprised if they don't bid for all the barrels,” said Katherine Spector, of JPMorgan in New York.
Data released on Thursday suggested that, while petrol is in short supply, oil companies still have plenty of crude in their inventories. The companies' stocks fell 6.45m barrels last week, significantly less than the 13.6m barrels of production capacity lost to the hurricane suggesting that the shortfall did not warrant the scale of the governments' responses.
President George W. Bush has insisted that the US Strategic Petroleum Reserve, which holds nearly 700m barrels of crude oil, will release supplies to relieve shortages, not to depress prices.
The same line has been taken by the International Energy Agency, the industrial countries' oil watchdog, which last week announced a 2m-barrels-a-day emergency release for the next 30 days. That total of 60m barrels includes the 30m barrels from the US's SPR. Société Générale, the Paris-based bank, estimates that the emergency stocks released more than cover last week's loss of crude production and the continuing losses expected over the next 40 days.
Frédéric Lasserre, the bank's chief oil analyst, said the emergency stocks of crude released covered 154 per cent of the lost production.
The excess oil comes on top of commercial crude inventories in the US that are well above 2004 levels and the average over the past five years.
But Mr Lasserre said emergency stockpiles of petrol released by Europe only covered half the loss caused by Hurricane Katrina.
Five US refineries, with a combined capacity of more than 1.1m b/d, 5 per cent of the country's total, were still closed on Thursday.
Samuel Bodman, US energy secretary, said it would take “at least three months” to get them producing. Refineries process crude oil into petrol, diesel, jet fuel and other products, so shutting down a refinery reduces the need for crude but also curtails the supply of petroleum products.
In spite of that, more than 60 per cent of the total international emergency stocks that are being released consist of oil, with petrol accounting for 18.7 per cent. The rest is heating oil and fuel oil.
The US's SPR only contains crude oil, while European countries stock both oil and petroleum products.
Mr Bush criticised the Clinton administration for using the SPR in 2000 to manipulate markets and refused to tap it as prices reached records and pressure from Democrats grew earlier this year. But shortly before the hurricane, oil prices rose to $60 a barrel and there were signs that high oil prices were affecting the economy in the US and beyond.
Wal-Mart warned that its bottom line was suffering because record petrol prices meant its customers had less money to spend in the stores. Meanwhile Asian countries, such as Indonesia or the Philippines, began to blame the decline in their growth and the value of their currency on high oil prices. US oil prices rose 12 cents on Thursday to $64.49 a barrel.
