Oil Plunges as Japan's Refiners Shut Plants After Earthquake
A fire at Cosmo Oil Co. 's oil refinery in Chiba, outside Tokyo, is spreading, a Fire Department spokesman said. Photographer: Andy Rain/Bloomberg
Oil fell below $100 a barrel in New York for the first time in more than a week after Japan's strongest earthquake in at least a century forced refiners to shut processing plants.
Brent crude futures in London headed for their first weekly decline in seven following the temblor in the world's third-largest crude user. A fire at Cosmo Oil Co.'s refinery in Chiba, outside Tokyo, is spreading, a Fire Department spokesman said. JX Nippon Oil & Energy Corp. closed refineries in Sendai, Kashima and Negishi.
"The earthquake is having a psychological impact on the market in triggering a rise in risk aversion," said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. "The effect is also physical, in that oil demand from Japan could temporarily be lower."
Crude for April delivery tumbled as much as $3.69, or 3.6 percent, to $99.01 a barrel in electronic trading on the New York Mercantile Exchange. It was at $99.72 at 11:41 at a.m. London time. This week prices are down 4.4 percent, the first weekly drop in a month.
Brent oil for April settlement on the London-based ICE Futures Europe exchange dropped as much as $2.93, or 2.5 percent, to $112.50 a barrel. It was trading at $112.92 at 11:40 local time. The contract has lost 2.8 percent this week and is headed for the first decline in seven weeks.
Japan's Refineries
Anti-government demonstrators in Saudi Arabia, OPEC's largest producer, are advocating a "Day of Rage" today, and police in anti-riot vehicles patrolled the capital, Riyadh. In the kingdom's Eastern Province, home to many of its minority Shiite Muslims, three people were injured yesterday when security forces broke up a protest in the city of Qatif, Major General Mansour al-Turki, an Interior Ministry spokesman, said.
The Organization of Petroleum Exporting Countries will release its monthly report on global oil supply and demand levels later today.
Japan was struck by an 8.9-magnitude earthquake off the northern coast near the city of Sendai at 2:46 p.m. local time. The country was hit by 10 aftershocks, according to the U.S. Geological Survey.
The Japan Meteorological Agency is warning of further aftershocks and told people to avoid coastal areas and evacuate to higher ground, according to an official at a press conference in Tokyo shown on NHK. Aftershocks continued through to 5 p.m. local time.
The temblor forced Cosmo Oil to shut its 220,000 barrel-a- day refinery in the city of Chiba, near Tokyo, after a fire started at the facility's storage tanks, said Yusuke Kanada, a company spokesman. JX Nippon's three plants that closed have a combined processing capacity of about 600,000 barrels daily.
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., 19.25 million, the agency said.
U.S. Economy
Oil fell after the U.S. Labor Department said yesterday that jobless claims increased by 26,000 to 397,000 last week from a three-year low. Economists forecast they would climb to 376,000, according to the median estimate in a Bloomberg survey.
An Energy Department report on March 9 showed crude stockpiles rose 2.52 million barrels to 348.9 million last week. A 1 million-barrel increase was forecast by a Bloomberg News survey.
Analysts surveyed by Bloomberg News were split over the direction of crude oil prices next week amid spreading unrest in the Middle East and signals 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.
To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
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