NEW YORK – Oil prices fell Monday as analysts sorted out how much the disaster in Japan will affect global energy demand.
Japan, the world's third-largest oil consumer, was hit Friday with a devastating earthquake and tsunami. Some parts of northeastern Japan are still without electricity. Three of five major oil refineries have shut down, and authorities are still trying to stabilize damaged nuclear plants.
Analysts expect the country's energy demand will fall in the short-term. Japan will likely compensate for the shutdown of nuclear power plants by running other generators with oil, which should boost crude imports.
Benchmark West Texas Intermediate for April delivery fell $1.05 to $100.10 per barrel in morning trading on the New York Mercantile Exchange. Earlier it dropped below $99. In London Brent crude lost 19 cents at $113.65 on the ICE Futures exchange.
Many Japanese power plants can run on liquefied natural gas (LNG) and crude oil, though they'll likely favor oil, according to Michael Lynch, president of Strategic Energy & Economic Research. Lynch said there are more tankers available to deliver crude than LNG and more dedicated facilities in Japan that can accept oil imports.
"I'm sure people in places like Australia and Qatar will try to arrange LNG shipments, but oil is much easier to import," Lynch said. He added that Japan could boost crude imports by about 300,000 barrels per day while its energy infrastructure is hampered by the loss of nuclear power.
Meanwhile gasoline prices jumped in the U.S. on Monday for the 27th straight day, to a national average of $3.56 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has increased by 43 cents in the past month and 76.9 cents since a year ago.
In other Nymex trading for April contracts, heating oil added 1 cent at $3.0375 per gallon and gasoline futures lost 4 cents at $2.9495 per gallon. Natural gas gained 12 cents at $4.003 per 1,000 cubic feet.
Monday, March 14, 2011
Sunday, March 13, 2011
Oil price falls back below $US100 a barrel
OIL prices fell below $US100 a barrel today as damage to refineries in Japan and shuttering of factories, following a huge earthquake and tsunami, looked likely to outweigh any boost to oil demand from reconstruction work for several months to come.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in April hit an intraday low of $US99.18 a barrel, down $US1.98 in the Globex electronic session. The contract clawed back some of those losses to trade at $US100.03 a barrel by late this morning (AEDT).
April Brent crude on London's ICE Futures exchange fell $US1.31 to an intraday low of $US112.53 a barrel.
Declines were seen across the futures curve, as traders assessed the demand destruction from damage at several Japanese refineries. Japan is the world's third-largest oil consumer after the US and China, consuming about 4.4 million barrels of crude oil a day.
A blaze at a refinery owned by Cosmo Oil near Tokyo continued today, Japanese media reported. JX Holdings said over the weekend that part of its refinery in quake-hit Sendai was on fire, although the extent of the damage isn't clear.
Nomura analyst Shigeki Matsumoto said oil refiners have scope to raise output at other plants, which have been operating at subdued levels due to near-term weakness in industrial demand and a longer-term shift by Japanese consumers toward energy-efficient technology.
But it's unlikely that this would cover the lost output from the quake-hit plants. "The range of petrochemicals they can produce depends on the type of crude oil used and the equipment they have at each facility," Mr Matsumoto said.
Jim Ritterbusch, president of oil trading advisory firm Ritterbusch & Associates, said the Japan quake appears to be net bearish for the crude market, as the drag on the Japanese economy will more than offset any rise in fuel oil imports for power generation.
Japan's Big Three auto manufacturers are suspending production at their domestic plants due to difficulties in procuring auto parts following the earthquake. Toyota Motor is the worst affected, with 12 domestic plants temporarily closed.
Extended closures of nuclear facilities are likely to follow the struggle to contain a fire and radiation leaks at Tokyo Electric Power's Fukushima complex. Ten Japanese nuclear reactors with a combined capacity of 8.6 gigawatts, or about one-fifth of the country's nuclear power, have been taken offline because of the earthquake.
Roughly a quarter of Japan's electricity comes from nuclear generation, according to the US Energy Information Administration. About two thirds is powered by conventional sources such as gas, petroleum and coal.
Barclays Capital said that Japan's oil consumption would rise by around 238,000 barrels a day if fuel oil is used exclusively to compensate for the shortfall in nuclear power output, but said the actual figure will be lower as fuel-switching will also include natural gas and coal.
"We expect that a prolonged shutdown of the Fukushima Daiichi power station will increase import demand for fuel oil, coal and liquefied natural gas, putting upward pressure on coal and gas prices," said Lachlan Shaw, an analyst at Commonwealth Bank of Australia.
The Fukushima Daiichi nuclear plant's capacity translates to up to 14 million tonnes of thermal coal equivalent, or between 1.5 per cent and 2 per cent of global trade each year. Coal accounts for a quarter of Japan's energy consumption, higher than natural gas and nuclear power.
Weekly thermal coal prices at the Australian port of Newcastle -- a benchmark for the Asia-Pacific region -- were assessed prior to the Japan quake Friday at $US129.60 a tonne, close to a two-year high of $US131.71 a tonne reached February 25.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in April hit an intraday low of $US99.18 a barrel, down $US1.98 in the Globex electronic session. The contract clawed back some of those losses to trade at $US100.03 a barrel by late this morning (AEDT).
April Brent crude on London's ICE Futures exchange fell $US1.31 to an intraday low of $US112.53 a barrel.
Declines were seen across the futures curve, as traders assessed the demand destruction from damage at several Japanese refineries. Japan is the world's third-largest oil consumer after the US and China, consuming about 4.4 million barrels of crude oil a day.
A blaze at a refinery owned by Cosmo Oil near Tokyo continued today, Japanese media reported. JX Holdings said over the weekend that part of its refinery in quake-hit Sendai was on fire, although the extent of the damage isn't clear.
Nomura analyst Shigeki Matsumoto said oil refiners have scope to raise output at other plants, which have been operating at subdued levels due to near-term weakness in industrial demand and a longer-term shift by Japanese consumers toward energy-efficient technology.
But it's unlikely that this would cover the lost output from the quake-hit plants. "The range of petrochemicals they can produce depends on the type of crude oil used and the equipment they have at each facility," Mr Matsumoto said.
Jim Ritterbusch, president of oil trading advisory firm Ritterbusch & Associates, said the Japan quake appears to be net bearish for the crude market, as the drag on the Japanese economy will more than offset any rise in fuel oil imports for power generation.
Japan's Big Three auto manufacturers are suspending production at their domestic plants due to difficulties in procuring auto parts following the earthquake. Toyota Motor is the worst affected, with 12 domestic plants temporarily closed.
Extended closures of nuclear facilities are likely to follow the struggle to contain a fire and radiation leaks at Tokyo Electric Power's Fukushima complex. Ten Japanese nuclear reactors with a combined capacity of 8.6 gigawatts, or about one-fifth of the country's nuclear power, have been taken offline because of the earthquake.
Roughly a quarter of Japan's electricity comes from nuclear generation, according to the US Energy Information Administration. About two thirds is powered by conventional sources such as gas, petroleum and coal.
Barclays Capital said that Japan's oil consumption would rise by around 238,000 barrels a day if fuel oil is used exclusively to compensate for the shortfall in nuclear power output, but said the actual figure will be lower as fuel-switching will also include natural gas and coal.
"We expect that a prolonged shutdown of the Fukushima Daiichi power station will increase import demand for fuel oil, coal and liquefied natural gas, putting upward pressure on coal and gas prices," said Lachlan Shaw, an analyst at Commonwealth Bank of Australia.
The Fukushima Daiichi nuclear plant's capacity translates to up to 14 million tonnes of thermal coal equivalent, or between 1.5 per cent and 2 per cent of global trade each year. Coal accounts for a quarter of Japan's energy consumption, higher than natural gas and nuclear power.
Weekly thermal coal prices at the Australian port of Newcastle -- a benchmark for the Asia-Pacific region -- were assessed prior to the Japan quake Friday at $US129.60 a tonne, close to a two-year high of $US131.71 a tonne reached February 25.
Crude prices fall on demand concerns after Japan earthquake
Crude oil prices were lower Friday in the aftermath of an 8.9-magnitued earthquake in northern Japan, followed by a tsunami that, between the two of them, caused widespread damage.
Investors were concerned that demand for crude oil could fall in Japan because the quake and tsunami shut down most refinery production in the nation, possibly for an extended period of time.
April contracts for West Texas Intermediate crude was $1.56 lower to $101.14 per barrel at just past 2 p.m. on the New York Mercantile Exchange, while Brent crude was last reported down $1.54 to $113.89 per barrel on the ICE Futures Europe exchange in London.
Prices were also pushed lower after fewer than expected demonstrators turned out for “Day of Rage” protests in Saudi Arabia, reducing concerns of widespread unrest like that in other parts of the Middle East and North Africa in recent weeks.
Only a few hundred demonstrators were reported, none of them in the Saudi capital of Riyadh.
Additionally, new data from China showed that consumer prices were up 4.9 percent, more than expected, in February, while producer prices rose 7.2 percent in China last month, also more than anticipated, causing more concerns that interest rates could rise again in the continuing effort to fight inflation, raising the possibility that demand for crude oil could decline.
Nymex April gasoline futures were 4 cents lower to $2.98 per gallon in New York trade, while April heating oil futures dropped 2 cents to $3.03 per gallon, but April natural gas futures were 5 cents higher to $3.88 per million British thermal units.
Retail prices for gasoline were up more than a cent overnight in the United States, with drivers paying $3.542 per gallon on average nationally for regular unleaded.
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