Knee-jerk sell-offs across financial markets cause crude to dip, uncertainty in Middle East is still the main trigger and continue to motivate US gas rising trend…
Oil sinks below $100 after massive Japan quake
(AP) – 4 hours ago
Oil prices fell sharply to below $100 a barrel Friday after a massive earthquake and tsunami struck Japan, the world’s third-largest oil consumer, triggering knee-jerk sell-offs across financial markets.
The magnitude 8.9 earthquake slammed Japan’s northeastern coast in the afternoon there, unleashing a 23-foot (7-meter) tsunami, killing at least 40 people while 39 are missing. Regions as far as Hawaii and Alaska were bracing for damaging waves to hit their own coasts.
Fires triggered by the quake were burning out of control up and down Japan’s coast, including one at an oil refinery.
By early afternoon in Europe, benchmark crude for April delivery was down $2.82 to $99.88 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost $1.68 to $102.70 on Thursday.
In London, Brent crude was down $2.86 at $112.57 a barrel on the ICE futures exchange.
Japan’s benchmark Nikkei 225 stock index fell 1.7 percent Friday while Hong Kong’s Hang Seng index dropped 1.6 percent.
“After China and the U.S., Japan is the world’s third biggest consumer of commodities,” said a report from Commerzbank in Frankfurt. “Japan’s daily oil consumption in 2009 was 4.4 million barrels and this has to be covered virtually in full by imports. The demand for oil could be lower, at least temporarily, because of the earthquake.”
Traders are also eyeing protests in Saudi Arabia for signs they could escalate and potentially hamper production in the world’s largest crude exporter.
“Fighting continues in Libya but we think that a full interruption of Libya exports is now priced in and markets will react more to Saudi than to Libya headlines,” said analyst Olivier Jakob of Petromatrix in Switzerland.
On Thursday, Saudi police attacked a protest by minority Shiites in the eastern city of Qatif. Shiites, who account for about 10 percent of the kingdom’s 23 million population, have protested for two days demanding the release of political prisoners.
Pro-democracy activists have called for protests on Friday in the capital, Riyadh, to demand reforms to the monarchy. Public demonstrations are banned in Saudi Arabia.
Investors are sensitive to any sign of upheaval in Saudi Arabia because the OPEC leader has been using its spare capacity to make up for output lost amid the violent uprising against Libya’s government.
“Production losses of a good one million barrels a day in Libya are currently being compensated by Saudi Arabia,” Commerzbank said.
When news broke that Saudi Arabian police fired shots to break up the protest Thursday, prices soared $3 in just 12 minutes.
“Our biggest fear has been that the unrest infecting the Middle East would surface as violence or bloodshed in Saudi Arabia,” Cameron Hanover said in a report. “If protests start to create martyrs in Saudi Arabia, then it could be the beginning of the end.”
In other Nymex trading for April contracts, heating oil was down 4.93 cents at $2.9956 a gallon and gasoline dropped 5.96 cents to $2.96 a gallon. Natural gas fell 2.3 cents to $3.853 per 1,000 cubic feet.
Alex Kennedy in Singapore and Malcolm Foster in Tokyo contributed to this report.
Copyright © 2011 The Associated Press. All rights reserved.
Gas prices: Up 37 cents and counting
By Aaron Smith, staff writerMarch 11, 2011: 12:03 PM ETNEW YORK (CNNMoney) – If you think gasoline is expensive now, just wait. In the weeks to come, you’ll be looking back at today’s prices with a poignant sense of longing, if the forecasts become reality.
Gasoline prices just keep going up. Prices jumped for the 17th straight day Friday, increasing by 37 cents since Feb. 22 to a nationwide average of $3.542 per gallon, according to motorist group AAA.
And it’s not over.
“Given what’s going on, it could frankly go to $4,” said Joseph Stanislaw, senior adviser at consulting company Deloitte.
The earthquake in Japan, for all its devastation and loss of human life, is not contributing to high fuel prices, according to experts. High gas prices are being driven by anxiety over the ongoing instability in the Middle East and North Africa, where regimes are being threatened and toppled. The civil war in Libya and discontent with the Saudi Arabian monarchy are the main drivers for oil price volatility, which is the main culprit behind the run-up in gas.
Stanislaw said that gas prices are rising in tandem with “the general psychology around what we will call the Arab spring. Will demonstrations actually take place in Saudi Arabia? That will have a major influence on the price of crude oil, which will have a major influence on the price of gas in the U.S.”