Oil fell in New York, headed for the first weekly decline in a month, after Japan’s refiners shut processing plants following an 8.9-magnitude earthquake off the northern coast.
Futures slipped for a fourth day, losing as much as 1.8 percent, after the temblor in the world’s third-largest crude user. A fire at Cosmo Oil Co.’s oil refinery in Chiba, outside Tokyo, is spreading, a Fire Department spokesman said. JX Nippon Oil & Energy Corp. shut its refineries in Sendai, Kashima and Negishi. Prices had dropped before the earthquake on speculation the economic recovery in the U.S. may falter.
“Crude had been edging lower since before the earthquake,” said Victor Shum, a senior principal at consultants Purvin & Gertz Inc. in Singapore. “It depends on how long the plants are shut but if they are shut for an extended period that would reduce demand for crude.”
Crude for April delivery tumbled as much as $1.83, or 1.8 percent, to $100.87 a barrel in electronic trading on the New York Mercantile Exchange. It was at $101.43 at 4:43 p.m. Singapore time. Prices are down 2.9 percent this week.
Brent oil for April settlement on the London-based ICE Futures Europe exchange dropped as much as $2.60, or 2.3 percent, to $112.83 a barrel. The contract has lost 1.7 percent this week and is headed for the first decline in seven weeks.
Japan was struck by a 8.9-magnitude earthquake off the north 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.
The temblor forced Cosmo Oil to shut its 220,000 barrel-a-day refinery in the city of Chiba, near Tokyo, after a fired started at the facility’s storage tanks, said Yusuke Kanada, a company spokesman. JX Nippon’s three plants that closed have a combined processing capacity of about 600,000 barrels daily.
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 and the U.S. 19.25 million, the agency said.
Oil fell earlier after the Labor Department said U.S. jobless claims increased by 26,000 to 397,000 last week from a three-year low. Economists forecast they would climb to 376,000, according to the median estimate in a Bloomberg survey.
An Energy Department report on March 9 showed crude stockpiles rose to the highest since 2004 at Cushing, Oklahoma, the delivery point for West Texas Intermediate, the U.S. benchmark grade. Inventories increased 1.69 million barrels to 40.3 million last week, the highest since the department began gathering data at the hub.
Total U.S. crude stockpiles rose 2.52 million barrels to 348.9 million, the Energy Department report showed. A 1 million-barrel increase was projected, according to the median of 15 analyst responses in a Bloomberg News survey.
Analysts surveyed by Bloomberg News were split over the direction of crude oil prices next week amid spreading unrest in the Middle East and signals the global economic rebound is slowing.
Fifteen of 36 analysts, or 42 percent, forecast crude will advance through March 18. Fifteen predicted futures will decline. Six said there will be little change.