Oil prices rebound from sharp losses

16th March 2011, Comments 0 comments

World oil prices recovered somewhat on Wednesday, after slumping the previous day on mounting fears over a potential nuclear disaster in Japan.

New York's main contract, light sweet crude for delivery in April, known as West Texas Intermediate (WTI), rose $1.80 to $98.98 per barrel on Wednesday, after plunging $4.01 the previous day.

In London midday trade, Brent North Sea crude for April gained $2.08 to $110.60. The contract had slumped by $5.15 on Tuesday.

"This morning, crude oil prices rebounded and corrected higher," said Sucden analyst Myrto Sokou.

"WTI climbed while Brent crude oil surged towards $111 per barrel, amid hopes that the recent heavy sell-off across the equity and commodity markets has been overdone."

The market has been on tenterhooks over the nuclear crisis this week because Japan is the world's third biggest economy -- and is also the third largest global consumer of crude oil.

Japan's nuclear crisis deepened Wednesday with another fire at a quake-hit atomic power plant and a radiation spike there that forced the temporary evacuation of workers.

Military helicopters carrying giant buckets were preparing to drop water on the stricken plant, which has been hit by four explosions and two fires since last Friday's earthquake and tsunami knocked out cooling systems.

But media reports quoting defence ministry officials said the attempt was postponed because of high radiation levels over the Fukushima No. 1 plant, 250 kilometres (155 miles) northeast of Tokyo.

Scared Tokyo residents filled outbound trains and rushed to shops to stock up on face masks and emergency supplies, amid fears of radiation headed their way. Some foreign residents have also pulled out.

The oil market found further support from fresh unrest in the Middle East, where Bahrain has declared a state of emergency in a bid to quell protests.

Popular uprisings in the Middle East and North Africa -- which toppled the leaders of Tunisia and Egypt -- had been driving oil prices higher on concerns over supply disruptions.

Libyan strongman Moamer Kadhafi, who is facing a bloody, month-old uprising, has vowed to crush the rebellion.

On Wednesday, Bahrain's opposition accused the kingdom's Sunni authorities of killing three protesters in a violent raid on a peaceful pro-democracy camp that has sparked Shiite outrage across the region.

Hundreds of riot police backed by tanks and helicopters fired shotguns and tear gas canisters at demonstrators in Pearl Square in the early morning, clearing the symbolic heart of the uprising in the strategic Gulf kingdom.

The government said two police were killed in hit-and-run attacks by opposition drivers, bringing to four the number of officers killed in this way since Tuesday.

The violence came a day after King Hamad, supported by armed forces which have arrived in the tiny island state from Saudi Arabia and the United Arab Emirates, declared a three-month state of emergency.

The military intervention in Bahrain by Gulf troops to help quell pro-democracy protests is "foul and doomed," Iranian President Mahmoud Ahmadinejad said on Wednesday, the IRNA news agency reported.

© 2011 AFP

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