Crude oil in New York fell the most in almost four months after Japan’s strongest earthquake in at least a century shut refineries in the world’s third-largest oil-consuming country.
Futures were poised for their first weekly drop in a month following the temblor. Saudi Arabian police and anti-riot vehicles patrolled central Riyadh today to prevent a “Day of Rage” proclaimed by activists. Brent oil was set for its first weekly loss in seven.
“The combination of the damage in Japan, combined with thus far nothing significant in Saudi Arabia, is leading to the pullback,” said Kyle Cooper, director of research for IAF Advisors in Houston.
Oil for April delivery tumbled $2.83, or 2.8 percent, to $99.87 a barrel at 9:20 a.m. on the New York Mercantile Exchange. Earlier, futures dropped 3.6 percent to $99.01, the biggest decline since Nov. 12. Oil has fallen 4.4 percent this week.
Brent oil for April settlement on the London-based ICE Futures Europe exchange decreased $2.17, or 1.9 percent, to $113.26 a barrel. The contract has lost 2.3 percent this week.
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.
A storage-tank fire shut Cosmo Oil Co.’s 220,000 barrel-a- day refinery in Chiba, outside Tokyo, said Yusuke Kanada, a company spokesman. The blaze is spreading, a fire department spokesman said.
JX Nippon Oil & Energy Corp. closed refineries in Sendai, Kashima and Negishi. JX Nippon’s three plants that shut have a combined processing capacity of about 600,000 barrels a day.
“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.”
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. consumed 19.25 million, the agency said.
In Saudi Arabia, checkpoints were set up around the Al- Rajhi mosque. Three people were injured yesterday when security forces broke up a protest in the city of Qatif in Saudi Arabia’s Eastern Province, home to many of its minority Shiite Muslims, said Major General Mansour al-Turki, an Interior Ministry spokesman.
“There is a risk, yes. Is it big? I don’t think so,” Christophe de Margerie, chief executive officer of Total SA, said at a press conference in Paris today. “The world has understood that it’s not in anyone’s interest that the Middle East flares up.”