NEW YORK (AP) -- The devastating earthquake and tsunami in Japan will temporarily take pressure off of tightening global oil supplies, as the world's third-largest oil consumer works to rebuild its shaken economy, energy analysts said Monday.
But the disaster won't curb its energy appetite for long. Analysts say Japan will likely boost imports of diesel, natural gas and other refined fuels in coming weeks.
"Demand for petroleum products is going to soar," analyst and trader Stephen Schork said.
Benchmark West Texas Intermediate for April delivery fell 33 cents to $100.83 per barrel on the New York Mercantile Exchange. Earlier it dropped below $99.
In London Brent crude lost 13 cents at $113.71 a barrel on the ICE Futures exchange.
Oil prices had been surging in recent weeks because of separate events on the other side of Asia and in North Africa. Unrest in Libya forced that country to shut down its oil fields, which had been producing about 1.6 million barrels of crude per day. The squeeze on world supplies and concern that uprising could spread across the Middle East helped push oil prices about 24 percent higher in the past few weeks. Gasoline pump prices in the U.S. followed oil sharply higher and are still the most expensive ever for this time of year.
Friday's earthquake and tsunami in Japan pulled markets in the opposite direction. Japan imports and consumes about 4.4 million barrels of oil per day. Analysts say at least some of that will be reduced as steel plants, auto manufacturers and three of five major oil refineries shut down.
Some parts of northeastern Japan are still without electricity, and authorities are trying to stabilize damaged nuclear plants that have been taken off-line. About 27 percent of Japan's power needs are supplied by nuclear plants.
Analysts think Japan will compensate for the shutdown of nuclear power plants by running generators on other fuels. Many Japanese power plants can run on liquefied natural gas (LNG) and crude oil, though they'll likely favor oil, according to Michael Lynch, president of Strategic Energy & Economic Research. Lynch said there are more tankers available to deliver crude than LNG and more dedicated facilities in Japan that can accept oil imports.
"I'm sure people in places like Australia and Qatar will try to arrange LNG shipments, but oil is much easier to import," Lynch said. He added that Japan could boost crude imports by about 300,000 barrels per day while its energy infrastructure is hampered by the loss of nuclear power.
Japan's trade minister said Monday that the government will release enough oil from the country's reserves to cover three days of demand, according to Platts, the energy information arm of McGraw-Hill Cos.
Japan imports most of its oil from Saudi Arabia and the United Arab Emirates. It gets most of its LNG from Indonesia, Malaysia, and Australia. Analysts say Japan will try to tap those sources for more oil and LNG, and it will look to the U.S. and India for more refined fuels like diesel.
"The U.S. still has a surplus of both gasoline and distillate supplies with which to meet any such upswing in export activity," energy consultant Jim Ritterbusch said.
Natural gas for April delivery gained 3 cents to $3.923 per 1,000 cubic feet. Earlier in the day, it climbed to the highest level in a month at $4.053.
In other Nymex trading for April contracts, heating oil added 4 cents at $3.0650 per gallon and gasoline futures lost 3 cents at $2.9605 per gallon.
But the disaster won't curb its energy appetite for long. Analysts say Japan will likely boost imports of diesel, natural gas and other refined fuels in coming weeks.
"Demand for petroleum products is going to soar," analyst and trader Stephen Schork said.
Benchmark West Texas Intermediate for April delivery fell 33 cents to $100.83 per barrel on the New York Mercantile Exchange. Earlier it dropped below $99.
In London Brent crude lost 13 cents at $113.71 a barrel on the ICE Futures exchange.
Oil prices had been surging in recent weeks because of separate events on the other side of Asia and in North Africa. Unrest in Libya forced that country to shut down its oil fields, which had been producing about 1.6 million barrels of crude per day. The squeeze on world supplies and concern that uprising could spread across the Middle East helped push oil prices about 24 percent higher in the past few weeks. Gasoline pump prices in the U.S. followed oil sharply higher and are still the most expensive ever for this time of year.
Friday's earthquake and tsunami in Japan pulled markets in the opposite direction. Japan imports and consumes about 4.4 million barrels of oil per day. Analysts say at least some of that will be reduced as steel plants, auto manufacturers and three of five major oil refineries shut down.
Some parts of northeastern Japan are still without electricity, and authorities are trying to stabilize damaged nuclear plants that have been taken off-line. About 27 percent of Japan's power needs are supplied by nuclear plants.
Analysts think Japan will compensate for the shutdown of nuclear power plants by running generators on other fuels. Many Japanese power plants can run on liquefied natural gas (LNG) and crude oil, though they'll likely favor oil, according to Michael Lynch, president of Strategic Energy & Economic Research. Lynch said there are more tankers available to deliver crude than LNG and more dedicated facilities in Japan that can accept oil imports.
"I'm sure people in places like Australia and Qatar will try to arrange LNG shipments, but oil is much easier to import," Lynch said. He added that Japan could boost crude imports by about 300,000 barrels per day while its energy infrastructure is hampered by the loss of nuclear power.
Japan's trade minister said Monday that the government will release enough oil from the country's reserves to cover three days of demand, according to Platts, the energy information arm of McGraw-Hill Cos.
Japan imports most of its oil from Saudi Arabia and the United Arab Emirates. It gets most of its LNG from Indonesia, Malaysia, and Australia. Analysts say Japan will try to tap those sources for more oil and LNG, and it will look to the U.S. and India for more refined fuels like diesel.
"The U.S. still has a surplus of both gasoline and distillate supplies with which to meet any such upswing in export activity," energy consultant Jim Ritterbusch said.
Natural gas for April delivery gained 3 cents to $3.923 per 1,000 cubic feet. Earlier in the day, it climbed to the highest level in a month at $4.053.
In other Nymex trading for April contracts, heating oil added 4 cents at $3.0650 per gallon and gasoline futures lost 3 cents at $2.9605 per gallon.