International Energy Agency (IEA) member countries are likely to decide against offering more oil after last month's stockpile release failed to curb prices and Middle East output rose, and reports that Germany and Italy are expected to oppose any second release of emergency oil reserves by IEA – which needs the backing of all 28 members if it is to pour more oil on a volatile crude market. Nine out of 13 traders and analysts polled by Bloomberg News survey said the agency is unlikely to extend the program because Saudi Arabia is now pumping crude at the fastest pace since 2006 and inventory levels are above average. The IEA is expected to confer with its member countries by July 23 to decide whether to draw further on emergency oil stocks after its announcement last month of a 60 million-barrel release, only the third such move in its history. "Germany and Italy were not much in favor of the decision back in June," the French government source said. "While the decision was unanimous not all were committed." Asked whether they would resist this time, the source said: "This is likely." Whether the IEA or its member states will intervene again in the hopes of buffering a fragile global economy is the subject of intense speculation in oil markets. Nobuo Tanaka, Executive Director, IEA, said the group has not yet decided whether to conduct a second release of emergency oil reserves by members. "In a preemptive move to avoid a serious risk scenario, we released our reserves and we understand the release was a success for now," Tanaka said. He said recently that the group is ready to release more oil onto the market if necessary. "We are ready to act at any time and if we have to, we will continue," Tanaka said. The United States has, on rare occasions, dipped into its stocks unilaterally. And the IEA's own oil market report this week forecast a gap in global oil supplies for the third quarter, providing potential justification for more oil. Bob McNally, a former White House energy official who runs energy consulting firm Rapidan Group, which accurately predicted the first measure, says US officials are likely to seriously consider pushing the IEA to release more oil. "The odds of another release are much higher than the oil market expects," he said. "I'd be very surprised if a second tranche came out," said Amrita Sen, an analyst at Barclays Plc in London. "Crude supplies are plenty. Oil prices are back above where they were before the IEA release." France would not lead any opposition, but neither would it press for a further release, the French government source said. A German government official Friday said not all the reserves released so far had been used when asked whether the IEA should add further oil to the market. The official was noncommittal, however, about Germany's stance, saying it was waiting for the IEA's opinion, and Britain took a similar line. "We will wait for the IEA to conclude their analysis at the end of July and they will make a decision in light of that," said Cameron Ramos for the Department of Energy and Climate Change. There could be objections on the principle that emergency reserves should not be used for intervening in markets. "This is not an operation (the oil stock release) that can be repeated indefinitely," said a European diplomatic source. "This does not mean the move will not be repeated but this is an operation which is and must remain exceptional. Otherwise it loses its value. It is not a tool for markets." Oil prices rallied Tuesday as investors snapped up risky assets like stocks and bid up the euro amid optimism that Europe would act to resolve its debt crisis. New York's main contract, West Texas Intermediate light sweet crude for delivery in August, rose $1.57 to close at $97.71 a barrel. Brent North Sea crude for September delivery added $1.01 to settle at $117.06.
