By PABLO GORONDI
Oil prices rose to near $100 a barrel Thursday in a volatile market as clashes in Bahrain and Libya renewed concerns about risks to supplies and Japan battled to avoid a full meltdown at a damaged nuclear plant.
By midday in Europe, benchmark crude for April delivery was up $1.81 at $99.79 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained 80 cents to settle at $97.98 on Thursday. In London, Brent crude was up $2.33 at $112.93 a barrel on the ICE futures exchange.
Both Nymex and Brent moved in wide trading ranges of over $3.
“The high fluctuations are due to the great uncertainty on the market as to whether supply risks will increase amid the unrest in the Arab world or demand risks will increase in the wake of the disaster in Japan,” said analysts at Commerzbank in Frankfurt.
Japanese military helicopters dumped loads of sea water onto the Fukushima Dai-ichi nuclear complex Thursday in a bid to cool overheated uranium fuel rods that may be close to leaking more radiation. The plant was initially damaged last week by a massive earthquake and tsunami that is estimated to have killed more than 10,000 people and left hundreds of thousands homeless.
“The up-down nature of the news will continue to keep the energy markets off kilter, so the difficulty will be in deciphering what is a sensational news report and what is reality on the ground,” said Tom Pawlicki at MF Global in Chicago
Traders are mulling what impact the disaster will have on crude demand. Goldman Sachs estimates the cost of the disaster’s damage could reach $200 billion.
“The market continues to focus on short-term demand losses through reduced economic activity,” Barclays Capital said in a report. “However, the current loss of about 1 million barrels a day is likely to return relatively swiftly as some thermal plants resume operations and economic activity restarts.”
In Bahrain, clashes between security forces – some brought in from Saudi Arabia and other Gulf states – and anti-government protesters left five people dead as the Al Khalifa monarchy struggles to hold onto power. Saudi Arabia is the world’s largest oil exporter, and some analysts are worried the Bahrain unrest could spark an escalation of a conflict between Sunni Saudis and Shiite Iran.
The intervention of Saudi troops in Bahrain “could serve to deepen the ongoing political crisis in the country and intensify the regional power struggle between Saudi Arabia and the Iranians,” Barclays said. “The geopolitical backdrop of the oil market remains highly charged, likely to support prices at elevated levels and heightened volatility.”
Meanwhile, fighting during the last month between government and rebel forces in Libya has cut most of the OPEC nation’s crude production. On Wednesday, forces loyal to Moammar Gadhafi continued to push back rebels toward their few remaining strongholds.
In other Nymex trading for April contracts, heating oil was up 4.48 cents at $3.042 a gallon and gasoline gained 3.56 cents to $2.8793 a gallon. Natural gas rose 4.3 cents at $3.981 per 1,000 cubic feet.
Alex Kennedy in Singapore contributed to this report.
A service of YellowBrix, Inc.