Crude Oil Drops as Loss of Demand in Japan Outweighs Middle East Tension in Fx forex trading


Oil tumbled the most in almost five months as concern that damage from Japan’s earthquake will curb crude demand outweighed speculation of supply disruptions in the Middle East in Fx forex trading.

Oil fell 4 percent as a third explosion and fire struck Tokyo Electric Power Co.’s Fukushima nuclear plant. The March 11 temblor caused a tsunami that disabled cooling systems at the facility. Bahrain declared a state of emergency as a second contingent of troops from Gulf nations poured into the kingdom, while Libyan government forces moved against rebels.

Crude oil for April delivery dropped $4.01 to $97.18 a barrel on the New York Mercantile Exchange, the lowest settlement since Feb. 28. Futures fell the most since Oct. 19 and are up 22 percent from a year ago.

Brent oil for April settlement declined $5.15, or 4.5 percent, to $108.52 a barrel on the London-based ICE Futures Europe exchange, the biggest one-day drop since Feb. 4, 2010. Prices fell to a three-week low.

Japan was responsible for 5.2 percent of global oil demand in 2009, according to BP Plc, which publishes its BP Statistical Review of World Energy each June. Japan is the third-biggest crude-consuming country after the U.S. and China.
Panic Selling

Japan’s Topix stock index fell 9.5 percent after reports of the explosion and fire, the largest one-day slide since October 2008. The gauge has dropped 18 percent since the quake.

Refinery closures in Japan have affected about 1.3 million barrels of the country’s 4.52 million barrels a day of capacity, based on data from the Petroleum Association of Japan.

JX-Nippon Oil & Energy Corp. closed refineries in Sendai and Kashima in Japan’s northeastern Tohoku region. A fire at the Sendai plant was extinguished at about 2:30 p.m. local time today. The Negishi plant near Tokyo is also shuttered.

Cosmo Oil Co. shut its 220,000-barrel-a-day Chiba refinery following fires at liquefied petroleum gas storage tanks. Kyokuto Petroleum Industries Ltd. has shuttered its 175,000- barrel-a-day facility in Ichihara, near the capital.