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Oil slides as mega quake, tsunami swipe Japan

Oil slides as mega quake, tsunami swipe Japan
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First Published: Fri, Mar 11 2011. 03 54 PM IST
Updated: Fri, Mar 11 2011. 03 54 PM IST
London: Brent crude futures fell below $114 on Friday as a massive earthquake rocked Japan, creating a 10-metre tsunami and shutting down dozens of plants in the world’s third-largest oil consumer.
The oil market was also watching out for a planned day of demonstrations in Saudi Arabia, the world’s top oil exporter, and violence in Libya which has disrupted its oil exports.
ICE Brent crude fell $1.71 cents to $113.77 a barrel by 2:33pm. It has fallen from a 2-1/2-year high of $119.79 a barrel on 24 February. US crude for April delivery fell 83 cents to $101.87.
Japan was hit by a magnitude 8.8 earthquake, which was the largest since observation began in the late 19th century.
“This natural disaster could result in another sharp rise in risk aversion on markets and a continuation of yesterday’s correction on commodity markets,” said Commerzbank.
“After China and the US, Japan is the world’s third biggest consumer of commodities and is dependent on imports for virtually all commodities,” it added.
The biggest earthquake to hit Japan in 140 years struck the northeast coast on Friday, triggering a 10-metre tsunami that swept away everything in its path, including houses, cars and farm buildings on fire.
European shares fell at the opening to a 3-month low with market sentiment worsening further after the quake in Japan and on growing unrest in the Arab world.
Saudi Arabia’s capital was quiet ahead of a planned day of demonstrations that will test whether activists calling for political reform online will succeed in taking their protests to the streets.
A loose coalition of liberals, rights activists, moderate Sunni Islamists and Shi’ite Muslims has called for reform and a Facebook page urging protests, strictly forbidden in the conservative kingdom, attracted more than 30,000 supporters.
“It is impossible to know what the outcome will be in the Middle East, but while support for .. protests could prove to be a short-term oil market inflection point, looking further forward it would be optimistic to expect Libyan oil production to return to normal levels this year,” Lawrence Eagles with J.P. Morgan said in its research note.
In Libya, forces loyal to Libyan leader Moammar Gadhafi have entered the oil port of Ras Lanuf in the east of the country and are fighting for control of the town, rebels said on Friday.
The unrest in the oil rich North Africa and Middle East has so far taken precedence over economic woes. Friday protests are also planned in other Gulf countries such as Yemen, Kuwait and Bahrain, after the day’s religious prayers, inspired by upheavals in Tunisia and Egypt.
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First Published: Fri, Mar 11 2011. 03 54 PM IST
More Topics: Markets | Oil | Commodity | Brent | Dollar |