March 16, 2011 in Business

Oil prices fall to lowest level in weeks

Associated Press
 

NEW YORK – Oil prices fell sharply Tuesday on deepening fears about Japan’s economy after its nuclear crisis worsened following a devastating earthquake and tsunami.

Potentially dangerous levels of radiation have been reported leaking from a crippled nuclear complex in the disaster area. More than 10,000 people are thought to have died after the earthquake and tsunami hit Japan on Friday.

Investors worried about diminished demand for oil and other products in Japan, the world’s third-largest oil importer. However, Wall Street analysts expect that Japan will eventually increase imports of oil, coal and natural gas.

Royal Dutch Shell PLC said Tuesday that it will send liquefied natural gas and fuel oil to Japan to help meet power shortages. Japan produces about 28 percent of its energy from coal-fired power plants, but can also run some generators on LNG and even crude oil. Fifty-four nuclear reactors provide about 25 percent of the country’s power. Four of those reactors are in the nuclear plant that leaked radiation.

Benchmark West Texas Intermediate crude for April delivery dropped $4.01, or 4 percent, to settle at $97.18 per barrel on the New York Mercantile Exchange. Brent crude fell $5.15, or 4.5 percent, to settle at $108.52 per barrel on the ICE Futures exchange.

The uncertainty over how long it could take Japan to recover triggered a sell-off in other commodities as well, as stock markets fell around the world. Many investors bought assets considered to be safer to hold during uncertain economic times, such as the dollar.

The Dow Jones industrial average lost nearly 300 points before regaining ground. It was down 130 points in afternoon trading, after the Fed said it will stick with its $600 billion bond repurchase program and the U.S. economy was on a firmer footing. The Standard & Poor’s 500 index and the Nasdaq composite index also were lower.

Meanwhile, the U.S. Dollar Index, which tracks the greenback versus other major currencies, rose nearly 1 percent.

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