* Brent dips below $108/bbl for first time since Feb. 23
* Bahrain declares martial law after Saudi troops arrive
* Coming up: API oil data at 4:30 p.m. EDT Tuesday
(Updates prices, changes byline and moves dateline from
previous LONDON)
By Robert Gibbons
NEW YORK, March 15 (Reuters) - Oil prices fell sharply on
Tuesday as a deepening nuclear crisis in Japan caused by last
week's catastrophic earthquake and tsunami heightened risk
aversion across financial markets.
A magnitude 6.0 earthquake hit eastern Japan on Tuesday,
hours after the French Nuclear Agency said the country's
nuclear crisis is equivalent to number six on the INES scale of
nuclear accidents from one to seven. The 1986 Chernobyl
disaster was a seven and Three Mile Island a five.
Panic buying broke out in Tokyo shops after explosions at
two nuclear reactors sent a low-level radioactive wind towards
the capital on Tuesday, although officials said radiation
levels at the stricken Fukushima Daiichi nuclear complex had
fallen after an earlier spike. []
Brent crude futures for April delivery <LCOc1> fell $4.07
to $109.60 a barrel at 11:04 a.m. EDT (1504 GMT), having
dropped as low as $107.88, its lowest since $105.97 was struck
on Feb. 23.
U.S. crude futures for April delivery <CLc1> fell $3.15 to
$98.04 a barrel, having fallen as low as $96.71, lowest since
$96.31 was hit on March 1.
"This is a massive risk off day today," said Christin
Tuxen, analyst at Danske Bank. "The risk averse sentiment is
coming through both in the equity market and euro/dollar. It's
weighing on oil even though fundamental drivers should suggest
an upside."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Japan's unfolding disaster: http://r.reuters.com/mak58r
Japan graphics suite: http://r.reuters.com/quh58r How
a meltdown can occur: http://r.reuters.com/rah58r Nuclear
plants, quakes zones: http://r.reuters.com/qah58r LIVE
COVERAGE
http://live.reuters.com/uk/Event/Japan_earthquake2 Japan
quake rips through commodities, energy:
http://link.reuters.com/bum58r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Japanese stocks plunged 10.6 percent, posting the worst
two-day rout since 1987, as concerns grew over the economic
impact of the unfolding disaster. []
Oil demand from Japan, the world's third-largest user, is
likely to decline in the short term as manufacturing and
transport stall but could then rise as the country seeks to
replace nuclear with oil-fired power during reconstruction.
The International Energy Agency (IEA) said global oil
demand was likely to be lower than previously forecast in 2011
as a result of a price shock and trimmed its forecast by 10,000
barrels to 1.44 million barrels per day. []
MARTIAL LAW IN BAHRAIN
Oil markets kept a close eye on developments in the Middle
East where Bahrain declared martial law on Tuesday, a day after
Saudi forces arrived in the Sunni-ruled kingdom to help restore
calm following weeks of protests by the island's Shi'ite Muslim
majority.[]
Opponents of Bahrain's Sunni ruling family called the move
by Saudi Arabia a declaration of war, while Iran denounced it
as unacceptable and the United States urged its nationals to
leave the island, which is home to the U.S. Navy's Fifth
Fleet.
"We continue to see developments in Bahrain as an important
touchstone for the rest of the region," said Barclays Capital
analyst Amrita Sen. "It appears likely that the other
governments are determined to contain unrest to Bahrain for
fear of a heightened external influence in the region."
An opposition politician said a Bahraini man was killed in
clashes with police and analysts said escalating violence in
the Middle East would be likely to support oil prices.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Reuters Global Oil Forum will host an interactive Q+A with
IHS Global Insight Middle East specialist Samuel Ciszuk from
1530 GMT (1130 EDT) on Tuesday to discuss the political outlook
for the oil market. To visit Reuters Global Oil Forum:
rmchat://room/thomsreuters.com/Global_Oil_Forum
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
In Libya, Muammar Gaddafi's forces bombarded two rebel-held
towns as the battle for eastern Libya edged closer to the
insurgent stronghold Benghazi, far outpacing diplomatic efforts
to impose a no-fly zone to help the insurgents.
[]
On the data front, markets were looking towards weekly U.S.
inventory numbers from industry group American Petroleum
Institute. A Reuters poll indicated U.S. crude oil stockpiles
probably rose by 1.8 million barrels last week. []
(Additional reporting by Nia Williams and Ikuko Kurahone in
London and Alejandro Barbajosa in Singapore; Editing by
Marguerita Choy)
