That came on top of a $1.48 decline on Friday in anticipation of the release which will add a million barrels a day to US supplies for a month.

US light crude was $1 lower at $31.68 a barrel. Energy Secretary Bill Richardson late on Friday announced the release of 30 million barrels of crude from the 571 million-barrel Strategic Petroleum Reserve - the first use of the SPR since Iraq's invasion of Kuwait in 1990. Dealers said the size of the release came as a surprise andthe price decline could accelerate in coming weeks.

"It will bring the price epicentre down. It will not bring a radically different situation but will fill in the gap in terms of market sentiment and remove panic," said David Brown, chief economist at Bear Stearns in London.He predicted $25 a barrel in the fourth quarter.

"Given current oil inventories, we believe that the theoretical price for Brent should be around $27 - around $3 of the $6-$7 of froth has already been removed," said Dresdner Kleinwort Benson in a note to clients.

The Clinton administration said the crude was needed toavoid a winter shortage of heating oil stockpiles, now near 24-year lows.The initiative is designed to encourage refiners to restockpetroleum product reserves by pushing down the value of raw material crude."The underlying cause of low inventories is the high priceof crude oil," President Bill Clinton said on Sunday. "The overriding purpose for our action is to increase supply and help consumers make it through the cold winter.

Brent now $5 off peak
Brent crude now is 13 percent below the decade-high of$34.98 a barrel set just a week ago while US Futures have tumbled 17 percent from a post-Gulf War peak of $37.80. The head of the West's energy watchdog, the InternationalEnergy Agency, called the release "significant" and said prices could be expected to decline.

"It's a significant volume of oil. It's obviously more thanthe last increase in production announced by OPEC. It's obviously going to have a downward effct," IEA executive director Robert Priddle told Reuters.

He said that he knew of no other IEA member - the agencydraws its membership from the Organisation for Economic Cooperation and Development - that was considering tapping government stocks. The European Commission in Brussels said European Unionfinance ministers might examine the possibility of using mandatory EU reserves as part of wider talks on oil prices when they meet on Friday. "For the moment there is no intention at a European level touse reserves," said EC spokesman Gilles Gantelet.

The SPR release will add one million barrels a day to US crude supply in October, five percent of the 20 million bpd the United States consumes each day.

US Energy Secretary Bill Richardson left open thepossibility of dipping into emergency stockpiles again.

"After 30 days, after 30 million barrels, the president willmake an assessment and see where we are," he said on Sunday.

Pressure on OPEC eases
Washington's move will ease the pressure on the Organisation of the Petroleum Exporting Countries to do more to ease crude prices into the group's preferred range of $22-$28. "The increase of one million bpd from the US reserve, with the extra supply due on the market in October, will reduce speculation and we think that is positive," said OPEC President Ali Rodriguez, the oil Minister for Venezuela. OPEC-member Algeria, however, said the US move was not a good idea.

"It is not in their own interests to do it. someone has to refill stockpiles. It's a very short-term measure that may give the wrong signal that OPEC does not have enough capacity," said Algerian Oil Minister Chakib Khelil after arriving in Caracas for an OPEC summit. OPEC has increased output three Times this year, reversingsupply curbs that drove prices up from a 22-year low of less than $10 a barrel in 1998.

If prices stay above $28 in October for a basket of OPEC crudes, the cartel at the end of the month could trigger another 500,000 barrels daily under its price stability mechanism. OPEC has argued that high prices - which provoked widespread protests by truckers and farmers across Europe this month - are the result of refinery bottlenecks, fuel taxation and oil market speculation, rather than a lack of crude supply.While consumers like the United States, the world's biggest energy market, tremble at the thought of $40 a barrel oil as seen during the Gulf War 10 years ago, OPEC members quake at the idea of another crash to under $10 - seen just two years ago.