MW: Oil turns lower on reports of Libya cease-fire
Reported action follows United Nations resolution to protect civilians
By Claudia Assis and Polya Lesova, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures turned lower Friday after news reports that Libya’s foreign minister had announced an immediate cease-fire in the conflict-torn North African nation.
The announcement came after the United Nations Security Council approved a no-fly zone over Libya on Thursday and passed a resolution to take action to protect civilians.
Light, sweet crude for April delivery (CLJ11 100.62, -0.80, -0.79%) declined 77 cents, or 0.7%, to $100.67 a barrel on the New York Mercantile Exchange. It had traded as high as $103.66 a barrel earlier.
Brent for May delivery retreated 61 cents, or 0.5%, to $114.04 a barrel on ICE Futures in London.
U.K. Prime Minister David Cameron said earlier Friday that preparations were under way to deploy British fighter jets as part of moves to enforce the U.N. Security Council’s resolution on Libya.
Late Thursday, the council authorized “all necessary measures to protect civilians” under threat of attack in Libya, including in the rebel-controlled city of Benghazi.
Oil markets were also being influenced by the situation in Japan, in the wake of the 9.0-magnitude earthquake and tsunami that hit the country last week, sparking a nuclear crisis.
Efforts to contain the nuclear disaster continued Friday, centering on attempts to connect unstable nuclear reactors at the Fukushima Daiichi nuclear plant to external power sources, in order to conduct cooling operations. Read more about Japan’s nuclear crisis response.
Analysts at Nomura said reconstruction activities in Japan following the earthquake are likely to boost oil demand, given the extent of infrastructure damage.
“Oil demand will increase in the near term, as oil power generators are used in Japan as swing producers. The increase should counteract any immediate demand shortfall,” they said in a research note Friday.
“We do not expect a significant drop in oil demand in the country following the disaster and, depending on the extent of infrastructure damage, we see potential for a year-on-year increase in oil demand in the coming year,” the analysts said.
Energy products and natural gas followed oil’s reversal. Gasoline for April delivery (RBJ11 2.94, -0.01, -0.21%) retreated 2 cents, or 0.5%, to $3.94 a gallon. April heating oil (HOJ11 3.03, -0.03, -1.09%) lost 3 cents, or 1.2%, to $3.03 a gallon.
Natural gas for April delivery (NGJ11 4.12, -0.04, -0.91%) was down 1 cent, or 0.5%, to $4.14 per million British thermal units.
The contract on Thursday gained 5.6%, its biggest one-day percentage gain since July and, at $4.16 per million Btus, its highest settlement since February 4.
