Oil fell on Friday after a major earthquake struck Japan and Saudi Arabia launched a massive security operation in a menacing show of force to deter protesters from a planned a “Day of Rage”.
Brent crude in London was down $3 at $112.39 at midday while in New York crude oil fell back under $100 per barrel as traders bet that a massive earthquake in Japan would slash the country’s crude imports.
“The demand for oil [in Japan] could be lower, at least temporarily, because of the earthquake,” said Commerzbank analyst Carsten Fritsch.
“After China and the US, Japan is the world’s third biggest consumer of commodities and is dependent on imports for virtually all commodities.”
The biggest earthquake to hit Japan since records began 140 years ago struck the northeast coast, triggering a 30-foot high tsunami that swept away everything in its path, including houses, ships, cars and farm buildings.
Crude futures also slumped as Saudi Arabia launched a massive security operation in a menacing show of force to deter protesters from a planned a “Day of Rage” to press for democratic reform in the world’s biggest oil exporter.
Illegal demonstrations were supposed to start after Muslim Friday prayers at noon but as the mosques emptied there were no signs of rallies, with security men manning checkpoints in key locations across several cities.
OPEC on Friday warned that high prices could dampen demand later this year, as the oil cartel upgraded only slightly its 2011 world demand growth estimate.
The Organization of Petroleum Exporting Countries said it was pencilling in world oil demand growth of 1.44m barrels per day (bpd), or 1.67pc, to 87.83m bpd for this year. That represents only a marginal upward revision from 1.62pc.
Gold was on track for its biggest weekly decline since early January, down about $30 since hitting a lifetime high of $1,444.40 a troy ounce on Monday. Spot gold was $1,413 a ounce in London in early afternoon trading.
“Gold is trading off oil, but Japan’s earthquake and tension in the Middle East is helping,” said Andrey Kryuchenkov, an analyst at VTB Capital. “Markets are nervous also with a planned ‘day of rage’ in Saudi Arabia.”