LONDON: Brent crude prices bounced back up on Monday on continued unrest in oil rich North Africa and the Middle East, after falling to two-week lows on concerns over the economic impact from Japan’s massive earthquake last week.
ICE Brent crude was trading 13 cents up at $113.97 a barrel by 1427 GMT, reversing a $3 drop to a two-week low of $111.16 earlier in the day.
US crude were 68 cents lower at $100.48, after hitting an intraday low of $98.55.
Prices pushed off the lows after a report Saudi Arabia sent troops into Bahrain on Monday to help put down weeks of protests by the Shia Muslim majority, a move opponents of the Sunni ruling family there called a declaration of war.
Bahrain, an island off the coast of Saudi Arabia, called in forces from its Sunni neighbors to put down unrest by its Shia Muslim majority after protesters overwhelmed police and blocked roads in a resurgence of mass protests seen last month.
Christopher Bellew with Bache Commodities said the unrest in the region would continue to provide support to oil prices.
"With the continuing and arguably worsening unrest in the Middle East, I would expect the oil market to move higher again," he said.
Still, global markets remained under pressure due to the catastrophe in Japan, where oil demand from the world number three energy consumer, was expected to fall in the short to medium term as economic activity stalls following the quake.
Japan’s Nikkei stock average fell more than 6 percent, dragging global equities lower. Global commodities prices mostly fell.
Prime Minister Naoto Kan on Sunday said the country was facing its biggest disaster since the second world war. The earthquake and tsunami on Friday devastated a large part of northeast Japan, killing at least 10,000 people.
Nuclear power plants’ coolant systems failed and two explosions hit the Fukushima nuclear plant. Operator Tokyo Electric Power Co was struggling to keep coolant water in one reactor core.
Many other nuclear plants and oil refineries have been shut. Ports and other infrastructure sustained severe damage.
Refined oil products
Refined oil products and gas prices, however, were outperforming crude oil prices due to an expected increase in import demand in coming weeks and months from Japan to cover lost oil refining and nuclear power generation capacity.
Construction shares were up in Asia as northeast Japan was expected to need extensive reconstruction work.
In Libya, Muammar Qaddafi’s troops battled rebel fighters for control of the strategic oil town of Brega, while France was stepping up efforts to persuade world powers to impose a no-fly zone over Libya.
More than half of Libya’s 1.6 million barrels per day oil output has been shut in due to the unrest.
In Yemen, heavy gunfire was heard south of the capital on Monday and soldiers deployed in force in Sanaa itself, with a new wave of rallies reported across the country demanding President Ali Abdullah Saleh quit. –Additional reporting by Alejandro Barbajosa in Singapore
