NEW YORK-Crude oil prices slipped on Mon­day in volatile trad­ing, pres­sured by ex­pec­ta­tions of slow­er Japan­ese de­mand af­ter a dev­as­tat­ing earth­quake, while con­tin­u­ing un­rest in the Mid­dle East and Sau­di mil­i­tary in­ter­ven­tion in Bahrain helped lim­it oil loss­es. Glob­al mar­kets re­mained un­der pres­sure due to the cat­a­stro­phe in Japan. Oil de­mand in the world No 3 en­er­gy con­sumer was ex­pect­ed to fall in the short-to medi­um-term as eco­nom­ic ac­tiv­i­ty stalls and a third of its re­fin­ing ca­pac­i­ty was shut fol­low­ing the quake.

Prices bounced off ear­li­er lows on news Sau­di Ara­bia sent troops in­to Bahrain to help put down weeks of protests by the Shi'ite Mus­lim ma­jor­i­ty and op­po­nents of the Sun­ni rul­ing fam­i­ly there called the move a de­c­la­ra­tion of war. Brent crude fu­tures for April de­liv­ery fell 54 cents to $113.30 a bar­rel at 12.50 pm British time, hav­ing fall­en as low as $111.16. US crude fu­tures for April de­liv­ery fell 90 cents to $100.26 a bar­rel, hav­ing fall­en as low as $98.47. "Japan's de­mand is ex­pect­ed to be way down in the near- to medi­um-term. But Sau­di troops in Bahrain and fight­ing in Yemen and Libya bounced crude off their lows," said Phil Fly­nn, an­a­lyst at PFGBest Re­search in Chica­go.

Emer­gency fu­el needs

US heat­ing oil, ICE gas oil and nat­ur­al gas fu­tures were sup­port­ed by the ex­pect­ed in­crease in im­ports re­quired by Japan to cov­er lost oil re­fin­ing and nu­clear pow­er gen­er­a­tion ca­pac­i­ty. US Gulf Coast jet fu­el and ul­tra-low sul­phur diesel dif­fer­en­tials to the bench­mark heat­ing oil fu­tures con­tract rose more than a pen­ny per gal­lon on ex­pec­ta­tions of boost­ed ex­ports to Japan.

Nu­clear woes

Japan scram­bled to avert a melt­down at a strick­en nu­clear plant af­ter a hy­dro­gen ex­plo­sion at one re­ac­tor and ex­po­sure of fu­el rods at an­oth­er on­ly days af­ter a dev­as­tat­ing earth­quake and tsuna­mi. Nu­clear fu­el rods at one of the quake-strick­en units were ex­posed for a sec­ond time, lo­cal me­dia said, quot­ing the plant's op­er­a­tor, Tokyo Elec­tric Pow­er Co, in­creas­ing the risk of a melt­down and a high­er lev­el of ra­di­a­tion leak.

In Yemen, a neigh­bour­ing coun­try to Sau­di Ara­bia, heavy gun­fire was heard south of the cap­i­tal and sol­diers de­ployed in force in Sanaa it­self, with a new wave of ral­lies re­port­ed across the coun­try de­mand­ing Pres­i­dent Ali Ab­dul­lah Saleh quit. Muam­mar Gaddafi's troops bat­tled rebel fight­ers for con­trol of the strate­gic oil town of Bre­ga and France stepped 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. (Reuters)