Oil slides below $100 on Japan disaster

NEW YORK—Oil prices continued to slide yesterday, dropping below US$100 per barrel for the first time in more than a week, after a massive earthquake spawned a tsunami that slammed into northern Japan.
Japan is the third-largest oil importer in the world. It’s unclear how much its economy will be affected by the disaster, yet the news helped slow down what had been a sharp, three-week rally in oil markets. Benchmark West Texas Intermediate for April delivery tumbled US$1.60 to US$101.10 per barrel in midday trading on the New York Mercantile Exchange. Prices fell as low as US$99.01 per barrel at one point.

Oil prices have surged 24 per cent since the middle of February, crossing the US$100 mark as uprisings in Libya forced much of the country’s oil production to shut down. The wave of pro-reform protests across North Africa and the Middle East have rattled energy markets, and many oil traders fretted about unrest spreading to Saudi Arabia. Rallies planned in that country for Friday appeared to draw small crowds, and none in the capital, as Saudi rulers deployed hundreds of police and blocked roads. Officials also beefed up security around the country’s oil fields.

The tsunami that ravaged Japan hit the coast with a 23-foot wall of water, sweeping away ships, cars and homes. It was unleashed by a magnitude-8.9 offshore quake that was followed for hours by more than 50 aftershocks. Hundreds are believed dead in the coastal city of Sendai. A large fire erupted at the Cosmo oil refinery in the city of Ichihara and burned out of control with 100-foot flames leaping into the sky. Other refineries were shut down as a precaution. Exxon Mobil Corp suspended operations at the TonenGeneral Sekiyu Kawasaki Refinery, which the company partially owns, though it doesn’t appear to have suffered any damage. TonenGeneral refines 296,000 barrels per day of crude. Royal Dutch Shell also reported no damages to its refineries in Japan or at any of the 3,900 Showa Shell-branded stations in the country.

Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said the tsunami will likely depress oil demand as Japan’s economy picks up the pieces, though it’s hard to say for how long. Some of Japan’s nuclear power plants also may have been damaged, and the country could be forced to import more oil and natural gas. The oil rally may have cooled this week, but it could turn right back around, Ritterbusch added. Meanwhile gasoline prices in the US continue to rise. The national average for regular climbed above US$3.54 per gallon on Friday. That’s 42.7 cents higher than a month ago and 76.6 cents more than the same time last year, according to AAA, Wright Express and Oil Price Information Service. In other Nymex trading for April contracts, heating oil dropped 1.15 cents to US$3.0338 per gallon and gasoline futures lost 2 cents at US$2.9970 per gallon. Natural gas rose 9 cents to US$3.923 per 1,000 cubic feet. In London, Brent crude gave up US$1.23 at US$114.20 per barrel. (AP)