Oil Trades Below $106 as Europe Debt Concerns Outweigh Middle East Unrest

Oil fell for a third day in New York and the concern that Japan's current nuclear crisis is slowing reconstruction efforts and debt of European countries "can reduce demand, unrest overshadowed in Libya and the Middle East.

Futures dropped as much as 0.4 percent on the longest run of decline in two weeks as the European Union reduced the amount committed to an emergency support system for the euro area. Japanese stocks fell after radiation hampered efforts to cool the reactors at the plant affected Fukushima Dai-Ichi and earthquake damage reduced the supply of materials for manufacturers. Libya rebels captured the oil port of Ras Lanuf yesterday, while 12 people died in clashes in Syria.

"Investors are pausing to any prospect of delays in the recovery effort after the Japanese nuclear matter or radiation," Serena said Lim, a strategist for energy and raw materials from Australia and New Zealand Banking Group Ltd. in Singapore. "The news from the euro area has been eclipsed other news such as Libya. The situation in Libya did not improve or worsen."

Crude for May delivery fell 40 cents to $ 105 a barrel on the New York Mercantile Exchange and was at $ 105.13 at 12:47 pm Singapore time. The contract has fallen for the third consecutive day, the longest streak in decline since the four days ending 11. Fell 20 cents to $ 105.40 on 25 March.

Prices are 15 percent for the quarter and 28 percent last year. Crude reached $ 106.95 on March 7, the highest since September 2008 and a technical resistance level.

Technical Strength

Oil prices often fail to extend gains when traders sell orders are concentrated in specific levels, creating so-called price resistance. May futures are also lower than $ 108.25 a barrel reached on March 7, the peak of the contract this year.

"We will find the strength in May 2011 high," said Stephen Schork, president of Schork Group Inc. in Villanova, Pa., in a note today. "Unless something serious happens especially in the Middle East, of course, in which case all bets are off."

Brent crude for May settlement fell 11 cents to $ 115.48 a barrel on the ICE Futures Europe exchange in London. The contract fell 13 cents to $ 115.59 on 25 March.

Oil prices could fall this week on speculation that a civil war that reduced Libya's oil production will not reduce supplies from other countries in the region, a Bloomberg News survey shows. Eleven of 24 analysts, or 46 percent, the forecast of crude oil is reduced by 1 April. Last week, 56 percent of respondents said that the future would win.

Oil is up 24 percent in New York from February 15 protests began in Libya, a member of the Organization of Petroleum Exporting Countries. The conflict is the bloodiest in the uprisings that have overthrown the presidents of Tunisia and Egypt and spread to Germany, Algeria, Bahrain, Iran, Yemen and Oman.

NATO

The Organization North Atlantic Treaty agreed yesterday to take command of all military operations related to the implementation of United Nations mandate to ensure safety of civilians in Libya against forces loyal to leader Muammar Gaddafi.

Within hours of that decision, allied warplanes began air strikes on the capital, Tripoli and Sirte, Gaddafi's hometown, The Associated Press. Strikes in Sirte were the first military operation that began March 19.

The president of Yemen, Ali Abdullah Saleh said he did not offer more concessions to his opponents and warned that his country faces a growing chaos, a senior military official and a former ally of the embattled president called for his resignation.

(Source: http://www.bloomberg.com/news/2011-03-27/oil-trades-below-106-as-europe-debt-concerns-outweigh-middle-east-unrest.html)