Oil prices slip after Japan quake

14th March 2011, Comments 0 comments

Oil prices fell Monday on the prospect of lower demand from quake-hit Japan, but losses were capped by mounting Middle East supply concerns as Saudi Arabia sent troops into Bahrain, traders said.

New York's main contract, light sweet crude for delivery in April, shed 99 cents to $100.17 a barrel, after earlier diving underneath $99 for the first time in two weeks.

In London afternoon trade, Brent North Sea crude for April lost 63 cents to $113.21, after earlier tumbling to a three-week low of $111.16.

In earlier deals, the market had fallen by more than $2 as traders fretted about slashed output and demand from Japan, which was devastated by a deadly earthquake and tsunami last Friday.

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.

"Clearly the market is reacting to the earthquake and tsunami in Japan where we had a lot of damage (and) a number of refineries have shut down or suspended operations," said Andy Lipow of Lipow Oil Associates.

"The market is anticipating that it's going to take quite some time to determine how much demand is going to be lost."

However, prices clawed back some Friday losses after news that Saudi Arabia has sent armoured troops into Bahrain to help restore order amid pro-democracy protests in the strategic Gulf kingdom. OPEC kingpin Saudi Arabia is the world's largest oil supplier.

"The Bahrain/Saudi issue ... was the main reason lifting oil back up from lows today in my view," said SEB chief commodities analyst Bjarne Schieldrop.

"The Bahrain conflict is important since Bahrain is located close to Saudi's major oil installations on the eastern shore of Saudi Arabia."

Thousands of mainly Shiite protesters occupied Manama's business district, turning the regional banking hub into a ghost town as they pressed their calls for democratic change from the Sunni Muslim monarchy.

The Saudi government said it had responded to a call for help from its neighbour as Saudi-led forces from the Gulf countries' joint Peninsula Shield Force crossed the causeway separating the two countries.

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 produced 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, the militant group MEND has threatened to carry out a campaign of simultaneous bomb blasts and attacks on oil facilities.


© 2011 AFP

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