Crude oil fell in New York, capping the first weekly drop in a month, after Japan’s strongest earthquake on record shut refineries and dissidents in Saudi Arabia failed to stage planned protests.
Oil declined 1.5 percent after the 8.9-magnitude temblor unleashed a 7-meter (23-foot) tsunami that killed hundreds of people in the world’s third-largest oil-consuming country. Saudi Arabian police and anti-riot vehicles patrolled central Riyadh today, preventing a “Day of Rage” proclaimed by activists.
“This is in response to the tsunami in Japan and the lack of the Day of Rage in Saudi Arabia,” said Hamza Khan, an analyst with the Schork Group Inc., a consulting company in Villanova, Pennsylvania. “If the Japanese refineries are down, then we’re going to see lower demand for crude oil.”
Oil for April delivery tumbled $1.54 to $101.16 a barrel on the New York Mercantile Exchange, the lowest settlement since March 1. Oil decreased 3.1 percent this week while it has risen 23 percent in the past year.
Oil also declined as President Barack Obama said he’s prepared to tap the U.S. Strategic Petroleum Reserve if the supply situation warrants.
Futures have surged 11 percent since Jan. 14, when the president of Tunisia was ousted in the first of the unrest that has rocked the Middle East and North Africa, including Saudi Arabia’s neighbors Yemen, Oman and Bahrain. Prices touched 29- month high of $106.95 a barrel in intraday trading March 7.
“If we see significant disruptions or shifts in the market that are so disconcerting to people that we think a Strategic Petroleum Reserve release might be appropriate, then we’ll take that step,” Obama said at a White House news conference.
The earthquake off Japan’s northern coast near the city of Sendai struck at 2:46 p.m. local time. The tsunami that followed engulfed towns along the northern coast.
A storage-tank fire shut Cosmo Oil Co.’s 220,000 barrel-a- day refinery in Chiba, outside Tokyo, said Yusuke Kanada, a company spokesman. JX Nippon Oil & Energy Corp. closed refineries in Sendai, Kashima and Negishi. JX Nippon’s three plants that shut have a combined processing capacity of about 600,000 barrels a day.
“Oil demand from Japan could temporarily be lower,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt.
Japan consumed 4.42 million barrels a day of oil in 2010, according to data from the International Energy Agency’s Feb. 10 Monthly Oil Market Report. China used 9.39 million barrels and the U.S. consumed 19.25 million, the agency said.
The IEA doesn’t expect Japan to tap its emergency crude and oil-product stockpiles after the quake, said Aad van Bohemen, the head of emergency policy at the Paris-based organization. Oil-sector impact there is “limited,” he said.
In Saudi Arabia, checkpoints were set up around the Al- Rajhi mosque. Three people were injured yesterday when security forces broke up a protest in the city of Qatif in Saudi Arabia’s Eastern Province, home to many of its minority Shiite Muslims, said Major General Mansour al-Turki, an Interior Ministry spokesman.
Brent oil for April settlement on the London-based ICE Futures Europe exchange fell $1.59, or 1.4 percent, to $113.84 a barrel. The contract slipped 1.8 percent this week.
The Organization of Petroleum Exporting Countries said in its monthly report today that there may be a “contra-seasonal” drop in global oil stockpiles over the next three months as a result of turmoil in the Middle East and North Africa.
Mideast unrest led to the resignation of Egyptian President Hosni Mubarak on Feb. 11 after weeks of protests, and Libya shut in crude exports as it fell into a civil war.
Shipments from Libya are “well below” 500,000 barrels a day, according to the IEA. That represents about a third of the oil the North African nation produced on average in January and February, data compiled by Bloomberg show.
Exports may have dropped to as little as 300,000 barrels a day, Al Arabiya television reported, citing Shokri Ghanem, chairman of Libya’s state-run National Oil Corp.
Analysts surveyed by Bloomberg News were split over the direction of crude oil prices next week amid spreading unrest in the Middle East and signs that the global economic rebound is slowing.
Fifteen of 36 analysts, or 42 percent, forecast crude will advance through March 18. Fifteen predicted futures will decline. Six said there will be little change.
Oil volume in electronic trading on the Nymex was 660,986 contracts as of 3:44 p.m. in New York. Volume totaled 929,247 contracts yesterday, 16 percent above the average of the past three months. Open interest was a record 1.6 million contracts.
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