Singapore, 24 June 2011

Bankers J.P. Morgan and Goldman Sachs slashed forecasts for crude prices in the third quarter after the IEA announced the release of 60 million barrels of oil next month to shore up the economic recovery.

J.P. Morgan cut its average forecast for Brent crude to $100 a barrel in the third quarter, down from its previous projection of $130. Goldman Sachs , one of the most influential banks in commodities, expects Brent prices to fall to $105-$107 a barrel by the end of July.

"If pursued rigorously, the 60 million-barrel sale over 30 days is a sufficient volume to cause a very substantial drop in the oil price," J.P. Morgan analysts led by Lawrence Eagles said in a note to clients late on Thursday.

Oil bounced back a dollar on Friday after tumbling to a four-month low in the previous session on news the world's top consumers planned to release emergency oil reserves for only the third time ever.

Bids for 30 mln barrels of SPR oil due by June 29. The U.S. Energy Department said on Thursday that companies must submit their bids by June 29 for purchasing 30 million barrels of oil from the Strategic Petroleum Reserve.

The United States said it would supply half of a planned 60 million-barrel emergency release of crude oil from members of the International Energy Agency, in a bid to cover supplies lost from Libya during the peak demand summer driving season.

Under the terms of the U.S. sale that were issued by the department, the government does not plan to stagger the sale of the oil and will offer all 30 million barrels in one bid sale. The department will offer "sweet" crude oil from three of the reserve's storage sites: Bryan Mound and Big Hill in Texas and West Hackberry in Louisiana.

Ends --

Reuters - for Commodities Now