(Updated from 3:55 p.m. EDT)
has authorized the release of 30 million barrels of oil from the U.S.'
Strategic Petroleum Reserve
over the next 30 days.
Although Energy Secretary Bill Richardson went to great pains talking about how the action had been taken to ensure that Americans would be able to heat their homes and said there was no intent "to manipulate the price," the move is largely symbolic. The U.S. uses 10.7 million barrels a day over what it produces -- the SPR release adds up to less than three days of oil.
Symbolism matters, though. Many have pooh-poohed the use of the reserve, noting, for example, that the energy problem is as much about capacity as anything else. Refiners are redlining it, and a relative drop in the barrel of low-grade crude doesn't do all that much. Moreover,
, which is critical of an SPR release, could easily cut production by, say, 30 million barrels.
Yet oil is a traded commodity, and as such there is a great deal of psychology behind its price movements. As it became clear over the past two days that an SPR release would be happening, the price of crude dropped 12%. It closed today at $32.68 a barrel. Meantime, the
Philadelphia Stock Exchange Oil Services Index
lost 1.9% today, while the
Amex Oil & Gas Index
"A release from the SPR is going to help the market continue lower," says
energy trader John Kilduff. "It will take the momentum and price fear premium out of the market -- participants are fearful about supplies."
It's a situation, says Kilduff, where a drop of oil can parch a world of thirst.