BLBG: Oil Rises as Bahrain Violence Spurs Concern Middle East Supplies at Risk
Oil rose from the lowest in two weeks in New York as escalating violence in Bahrain stoked concern turmoil may spill into neighboring Saudi Arabia, threatening supplies from the world’s biggest crude exporter.
Prices advanced as much as 1.1 percent as riot police cleared anti-government protesters from a central square in Bahrain’s capital. The country declared a state of emergency yesterday as Saudi-led military intervention failed to end demonstrations. Oil dropped 1 percent earlier today as Japan battled to prevent a nuclear meltdown that threatens to worsen damage to the economy from last week’s earthquake.
“Had it not been for the disaster in Japan, with the Saudi troops moving into Bahrain the oil price should have moved toward $120,” said Victor Shum, a senior principal at energy consultants Purvin & Gertz Inc. in Singapore. “The contagion effect on oil prices is still present.”
Crude for April delivery rose as much as $1.11 to $98.29 a barrel in electronic trading on the New York Mercantile Exchange and was at $98.03 at 4:01 p.m. Singapore time. Yesterday, prices fell to $97.18, the lowest since Feb. 28.
Brent oil for April settlement gained $1.13, or 1 percent, to $109.65 a barrel on the London-based ICE Futures Europe exchange. Yesterday, the contract lost $5.15, or 4.5 percent, to $108.52, the biggest one-day drop since Feb. 4, 2010.
Manama Cleared
Bahrain security forces used tear gas to drive protesters from their rallying point at the central Pearl Roundabout in the capital Manama. The mostly Shiite Muslim demonstrators fled into nearby backstreets as military vehicles were deployed near the area and helicopters flew overhead. Gunfire was heard in the capital. Riot police put out fires with water cannons and fanned out into the city streets. The stock market suspended trading.
Crude yesterday gained the declaration of a state of emergency as a second contingent of troops from Gulf nations poured into the kingdom, while forces loyal to Libyan leader Muammar Qaddafi moved against rebels. Bahrain is connected to Saudi Arabia, the world’s largest oil exporter, by a 25 mile causeway.
Libya’s crude exports may be halted for “many months” because of damage to facilities and international sanctions, the International Energy Agency said yesterday. Forces loyal to leader Muammar Qaddafi advanced toward Benghazi yesterday after taking the gateway city of Ajdabiya yesterday.
Japan Closures
Japan continues to suffer aftershocks after the 9.0 magnitude earthquake on March 11 shut factories and refineries. Workers at Tokyo Electric Power Co.’s Fukushima Daiichi nuclear plant were struggling to cool reactors at the plant and prevent the spread of further radiation.
The earthquake closed about 1.3 million barrels of the country’s 4.52 million barrels a day capacity, based on data from the Petroleum Association of Japan. JX-Nippon Oil & Energy Corp. idled refineries in Sendai and Kashima in the northeastern Tohoku region. A fire at the Sendai plant was extinguished at about 2:30 p.m. local time yesterday. The Negishi plant near Tokyo is also shuttered.
TonenGeneral Sekiyu K.K. has restarted “portions” of its 335,000 barrel-a-day Kawasaki plant near Tokyo and expects to be at full operations in a few days, it said in a statement late yesterday. Kyokuto Petroleum Industries Ltd. is preparing to start bringing its 175,000-barrels-a-day facility in Ichihara, near the capital, back on line, said TonenGeneral, a joint venture partner in Kyokuto.
Cosmo Oil Co.’s 220,000-barrel-a-day Chiba refinery remains shut following fires at liquefied petroleum gas storage tanks after the March 11 temblor.
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.
U.S. Stockpiles
U.S. crude oil supplies climbed 91,000 barrels last week, according to the industry-funded American Petroleum Institute. An Energy Department report today may show stockpiles rose 1.3 million barrels last week from 348.9 million, according to the median of 15 analyst estimates in a Bloomberg News survey.
Gasoline futures for April rose .97 cents today to $2.8126 a gallon on the Nymex, the fifth straight day of declines. U.S. motor fuel demand was up 2.2 percent in the week ended March 11 to 9.149 million barrels a day, according to data from MasterCard Inc.’s SpendingPulse report. That was down 0.8 percent from the same period a week ago.
U.S. gasoline averaged $3.53 a gallon during the week, 28.9 percent higher than a year ago, the report said.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net;
To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net
