Oil prices fell on reserve crude release news

Oil prices fell Wednesday from peaks over US$70 on news that the U.S. government would release crude from its reserves to make up for interrupted shipments caused by Hurricane Katrina's rampage through the Gulf of Mexico. But gasoline surged to record levels.

The announcement reflected how seriously the U.S. administration viewed the situation the reserve is meant to cushion the nation against national emergencies.

U.S. Energy Secretary Samuel W. Bodman said the government will release an unspecified amount of oil from its strategic petroleum reserves a move designed to give refineries in the Gulf Coast area a temporary supply of crude oil to take the place of interrupted shipments from tankers or offshore oil platforms affected by the storm.

Light, sweet crude for October delivery on the New York Mercantile Exchange rose as high as US$70.65 before slipping back after Bodman's comments to US$69.30, down 51 cents from Tuesday's settlement price, reports the AP.