Oil prices slide on prospect of lower Japanese demand

14th March 2011, Comments 0 comments

World oil prices dropped $2 Monday on the prospect of lower crude demand from quake-hit Japan, traders said.

New York's main contract, light sweet crude for delivery in April, shed $2.0 to $99.16 a barrel.

In London morning trade, Brent North Sea crude for April lost $2.02 to $111.82.

"Given the earthquake disaster in Japan, crude oil consumption should be much lower temporarily in the world's third largest oil consuming country," said Commerzbank analyst Carsten Fritsch.

Crude futures fell immediately last week in reaction to Friday's massive 8.9-magnitude earthquake off Japan and tsunami that battered the country's northeast coast and stretched across the Pacific.

"In the short term, there might be some demand disruptions due to the Japanese earthquake, but there will be an increase in fuel oil imports due to the lost nuclear power capacity, which will be supportive of fuel oil prices in the near term," said Chen Xin Yi, commodities analyst for Barclays Capital.

Investors were also following the unrest in oil-producing Libya, where rebels continue to battle forces loyal to leader Moamer Kadhafi. Libya's state agency said Monday that Kadhafi had invited Chinese, Russian and Indian firms to produce its oil, replacing Western companies that fled unrest.

Qatar's Energy Minister Mohammed Saleh al-Sada meanwhile said Sunday that world oil output was sufficient despite the unrest in Libya, which had slashed the country's crude production.

Libya was producing 1.69 million barrels per day (bpd) before the unrest, according to the International Energy Agency. Of this, 1.2 million bpd was exported, mostly to Europe but with China and the United States also major customers.

In Nigeria, another key oil exporter, militant group MEND has threatened simultaneous bomb blasts and attacks on oil facilities.

"The Movement for the Emancipation of the Niger Delta (MEND) will soon commence with simultaneous bomb blasts and attacks on oil installations in the Niger Delta and other strategic locations in Abuja and Lagos state of Nigeria," the group said in an e-mail statement late Sunday.

The warning by MEND, which claims to be fighting for a fair share of Nigeria's oil wealth for the people of the Niger Delta, comes before Nigeria holds legislative and presidential elections in early April.


© 2011 AFP

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