Crude Oil Falls to Two-Week Low as Japan Fuel Demand May Drop After Quake

Oil fell to a two-week low in New York amid concern that the earthquake in Japan may reduce fuel demand in the world’s third-largest crude consumer.

Prices dropped as much as 1 percent after reports of additional damage and fires at a nuclear plant underscored the extent of destruction across Japan. About 1.3 million barrels a day, or 29 percent, of Japan’s refining capacity was closed after the country’s largest temblor on record. Oil gained 1.1 percent earlier on speculation unrest in the Middle East may lead to supply disruptions.

“The Middle Eastern premium seems to be eroding as we concentrate in an uptick in supply as a result of Japan shutting down refining capacity,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney.

Crude for April delivery fell as much as 96 cents to $96.22 a barrel in electronic trading on theNew York Mercantile Exchange, the lowest intraday price since Feb. 25. It was at $96.23 at 11:28 a.m. Singapore time. Yesterday, the contract dropped $4.01, or 4 percent, to $97.18, the lowest level since Feb. 28. Prices declined the most since Oct. 19 and are up 18 percent from a year ago.

Brent oil for April settlement retreated as much as $1.17, or 1.1 percent, to $107.35 a barrel on the London-based ICE Futures Europe exchange, the lowest intra-day price since Feb. 23. Yesterday, the contract lost $5.15, or 4.5 percent, to $108.52, the biggest one-day drop since Feb. 4, 2010.

(Source: http://www.bloomberg.com/news/2011-03-16/crude-oil-drops-in-new-york-to-trade-below-97-a-barrel-reverses-gains.html)