Brent touches 3-week low on Japan, erases loss on Bahrain

By @ibtimes on

Brent crude fell as much as 1.1 percent to touch a three-week low near $107 on concern about Japan's nuclear crisis, but recovered to erase losses as Bahraini security forces attempted to clear protesters on Wednesday.

Prices fell more than $1 after another fire broke out and radiation levels rose at the earthquake-crippled Fukushima nuclear plant north of Tokyo, but rebounded on news of a fresh crackdown against demonstrators in Manama.

Brent for April fell as much as $1.17 to $107.35 a barrel, the lowest since February 23, and was up 4 cents at $108.60 by 0625 GMT (2:25 a.m. ET). Prices reached almost $120 on February 24 as violence escalated in Libya, disrupting oil output. They slumped 4.5 percent on Tuesday, the biggest drop in more than a year.

Sentiment is still at very low levels with investors' appetite for riskier assets very much off the table, said Ben Le Brun, an analyst at CMC Markets.

The market is looking for a change in global sentiment, with the crisis in Japan being compounded by escalating violence in the Middle East.

Bahraini security forces in light armored personnel carriers began to clear makeshift roadblocks from a thoroughfare leading to the main financial district on Wednesday, as pitched battles raged with protesters.

Bahrain's king declared martial law on Tuesday as his government struggled to quell an uprising by the island's Shi'ite Muslim majority that has drawn in troops from fellow Sunni-ruled neighbor Saudi Arabia.

The island state lies less than 100 kilometers from the hub of the Saudi oil industry around Dhahran, including the world's largest oil fields, terminals and processing facilities.

U.S. crude touched $96.22 on Wednesday, the lowest price this month, before rebounding to $97.22, up 4 cents on Wednesday.

But oil prices have yet to benefit from an expected increase in demand for gasoil and fuel oil for power generation to replace some of the nuclear capacity lost following Friday's earthquake and tsunami. Brent has dropped 6 percent since the quake struck.

Oil shipments to Japan have not been significantly affected by the earthquake and subsequent nuclear crisis, a top shipping industry group said on Wednesday.

There has been no significant impact for our members trading in the region, said Tim Wilkins, Asia-Pacific manager for Intertanko, the world's largest association of tanker owners, covering a combined fleet of more than 3,000 vessels.

Academics and nuclear experts agree that the solutions being proposed to contain damage to the Daiichi reactors at Fukushima, 240 km (150 miles) north of Tokyo, are last-ditch efforts to stem what could well be remembered as one of the world's worst industrial disasters.

In Libya, Muammar Gaddafi's government forces pushed eastwards toward the Libyan rebel stronghold of Benghazi and his government predicted victory within days while world powers debated imposing a no-fly zone to help stop him.

Libya's oil output, normally of about 1.6 million barrels per day and down by at least two-thirds, will take some time to return to normal, the head of the National Oil Corporation said on Tuesday, because some installations have been damaged in fighting between rebel and government forces.

Shokri Ghanem also told Reuters that Libyan oil installations at Ras Lanuf, Brega, Es Sider and Mellitah were completely under central control and oil workers were assessing the condition of facilities.

Sustained high oil prices will damage world economic recovery, the International Energy Agency said on Tuesday, as it warned that OPEC's cushion of spare oil output to calm the market was at its lowest for four years.

(Editing by Clarence Fernandez)

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