Oil prices drop in Europe and US in wake of concerns Japanese demand will drop. West Texas oil prices hover around $100.
Oil prices fell Monday as analysts sorted out how much the disaster in Japan will affect global energy demand.
Japan, the world's third-largest oil consumer, was hit Friday with a devastating earthquake and tsunami. Some parts of northeastern Japan are still without electricity. Three of five major oil refineries have shut down, and authorities are still trying to stabilize damaged nuclear plants.
Analysts expect the country's energy demand will fall in the short-term. Japan will likely compensate for the shutdown of nuclear power plants by running other generators with oil, which should boost crude imports.
Benchmark West Texas Intermediate for April delivery fell $1.05 to $100.10 per barrel in morning trading on the New York Mercantile Exchange. Earlier it dropped below $99. In London Brent crude lost 19 cents at $113.65 on the ICE Futures exchange.
Many Japanese power plants can run on liquefied natural gas (LNG) and crude oil, though they'll likely favoroil, 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 oilimports.
"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.
Meanwhile gasoline prices jumped in the U.S. on Monday for the 27th straight day, to a national average of $3.56 per gallon (94 cents a liter), according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has increased by 76.9 cents since a year ago.
In other Nymex trading for April contracts, heating oil added 1 cent at $3.0375 per gallon and gasoline futures lost 4 cents at $2.9495 per gallon. Natural gas gained 12 cents at $4.003 per 1,000 cubic feet.