Oil prices fell on Friday after a massive earthquake shook Japan, shutting refineries and other industrial facilities in the world's third-largest oil consumer and triggering a broader sell-off in commodities.

Muted protests in Saudi Arabia contributed to the sell-off by investors who had been spooked by plans for day of rage demonstrations in the world's top oil exporter. Funds have bailed out of oil markets for the past several days after lifting their positions to a record high as of Tuesday.

U.S. heating oil and gasoline futures held up better than crude, receiving support from expectations that Japan will require more fuel imports after the quake and tsunami affected about a fifth of its capacity.

Brent crude futures for April delivery fell $1.59 to settle at $113.84 a barrel, losing 1.8 percent on the week, the first loss in seven weeks and biggest since November.

U.S. crude futures for April delivery fell $1.54 to settle at $101.16 a barrel, off a low of $99.01. It fell 3.12 percent on the week, its first weekly loss in four. Trading volume was light, however, at about 670,000 lots, nearly a third below the average of the past month.

The U.S. front-month heating oil crack spread, or refining profit margin, rose $1.21 to $26.39 a barrel at 4:45 p.m. EST, while the gasoline crack spread rose 67 cents to $24.79.

From an oil pricing perspective, the situation in Japan is likely to result in a negative impact on crude oil prices and a positive for refined products, said Dominick Chirichella, senior partner at the Energy Management Institute in New York.

Japan was hit by a magnitude 8.9 earthquake, the largest since observations began in the late 19th century.

Top Japanese refiner JX Nippon Oil & Energy Corp halted operations at three plants and fire engulfed a storage tank at a unit of Cosmo Oil Co <5007.T>.


The Japanese quake triggered across-the-board selling in commodities as funds who had piled into markets that were at or near record highs took profits in the face of uncertainty.

Speculators' net-long positions in U.S. crude futures rose to a record high in the week to March 8, the Commodity Futures Trading Commission said in a report on Friday.

Traders also pared positions on signs that a security clampdown in Saudi Arabia's capital kept a lid on a planned protest, even as demonstrations and unrest continued to rumble in nearby Kuwait, Bahrain and Yemen.

Fighting continued in OPEC-member Libya. Rebels repelled a counter-offensive by leader Muammar Gaddafi's forces, but appealed to foreign powers to impose a no-fly zone to stop further attacks. Most analysts have now written off any chance of a quick return of Libyan production.


Even with the focus on Japan, the Middle East and North Africa, brokers and analysts said oil prices felt pressure from news that Chinese inflation topped expectations in February, possibly triggering more monetary tightening that could dampen oil demand in the world's No. 2 oil consumer.

Rising gasoline prices pushed U.S. consumer sentiment to its lowest level in five months in early March, a Thomson Reuters/University of Michigan survey showed.

A separate report showed that U.S. retail sales posted their largest gain in four months in February.

(Additional reporting by Gene Ramos and Janet McGurty in New York, Ikuko Kurahone in London and Alejandro Barbajosa in Singapore; Editing by Marguerita Choy and David Gregorio)