Crude oil and gasoline prices fell on major markets Friday on the news that emergency supplies are being released from European and U.S. stockpiles.
U.S. Energy Secretary Samuel Bodman said the Paris-based International Energy Agency is allowing member governments to release 60 million barrels of oil and refined products onto the market over the next month. About half of that will be released from U.S. emergency reserves.
Mr. Bodman praised the decision by the 26-member IEA and the help being provided by America's European allies.
"This is a demonstration of the kind of solidarity and support [we are getting]," he said. "And I believe it is an appropriate response to the disruption that is currently occurring as a result of the hurricane that we are dealing with."
The additional supplies will help compensate for the loss of production from the hurricane-devastated U.S. Gulf Coast, where about one-third of the U.S. refining capacity is located. Mr. Bodman is hopeful that U.S. retail gasoline prices, which have soared this week, will soon turn downward.
"There will be additional supply available of both crude oil and refined product because of this decision of the IEA," he said. "And with additional supply, I would expect that there will be some decline in price, but that will be a function of the marketplace."
After rising all week to top $70 a barrel, crude oil prices on the New York Mercantile Exchange fell back Friday to about $68 per barrel. Gasoline futures prices were also down, for the first time this week.
Even though gasoline prices in some parts of the United States have risen by as much as 40 percent in recent days, there were relatively few cases of panic buying on Friday, although there were reports of long lines at gas station ahead of a three-day, holiday weekend.
There are some preliminary reports that oil and natural gas production in the Gulf of Mexico is already resuming in some areas. Charles Goodson of Petro Quest operates 11 production platforms in the Gulf. He spoke by phone with Bloomberg Television.
"We've really had no major damage - [just] hand-rails, things like that," he said. "Because most of these platforms are built to withstand direct hits from some of these hurricanes. Certainly, Katrina was a much larger hurricane, much higher winds, but for the most part, we came through this thing very well."
Mr. Goodson says he expects his company's production will reach 85 percent of capacity within the next few hours. Opinion continues to be divided on the longer-term economic impact of the disaster.