OIL FUTURES: Japan Nuclear Crisis Pushes Nymex Crude Below $97

SYDNEY (Dow Jones) - The front month crude futures oil fell below the key support level of $ 97/bbl Thursday following comments by a senior official in charge of regulating nuclear power in the U.S. indicating that the Japanese nuclear crisis is worse than previously thought.
In the New York Mercantile Exchange, the future of light, sweet crude for April delivery traded at least $ 96.60 a barrel by 2253 GMT, down $ 1.38 in the Globex electronic session. It has since recovered some of those losses to trade at $ 96.98/bbl at 2312 GMT, down just $ 1.
The May contract broke through the key threshold of $ 98/bbl, which caused a large liquidation of holdings. It reached an intraday low of $ 97.62/bbl, down $ 1.33.
Oil markets are watching very closely developments in Japan as the country is the world's users of the third-largest oil after the U.S. and China, which consumes around 4.4 million barrels of oil per day. While the earthquake and tsunami on Friday is likely to stimulate demand for oil by the end of the year when the rebuilding efforts of onset, short-term impact is seen by the market as bearish as it dampens economic activity.
Gregory Jaczko, chairman of the Nuclear Regulatory Commission, said the spent fuel pool in the fourth reactor of the plant in Fukushima Daiichi nuclear power in Japan has lost all or most of its water and radiation levels "are extremely high . Given the risks, said the U.S. Jaczko recommended a "much larger radio" for evacuations that Japan had imposed.
The comments come as officials struggle to extinguish burning Japanese spent fuel from the plant in Fukushima Daiichi amid reports of high radiation levels.
Jim Ritterbusch, president of oil trading firm Ritterbusch & Associates consultancy, said the decline in oil futures has a long way to go, possibly to $ 95/bbl, as global stock markets fall to the continuous output Japan's bad news. The Dow Jones industrial average closed down 242.12 points Wednesday, or 2.04%.
"While acknowledging the possible need to include additional data on the Middle East and North Africa the risk premium in the market, we also believe that the current fall in equity markets and the implications for other broad-based deleveraging could earn as One reason for prices, "Ritterbusch said.
Analysts said geopolitical tensions in the Middle East and North Africa are to prevent oil prices from falling even more sharply, possibly to $ 20 a barrel. Saudi troops have been deployed to Bahrain after protests in the small kingdom, while the fighting intensifies in Libya between the rebels and the ruling regime.
"If the situation worsens Bahrain, the already tense relationship Arabia and the United States could deteriorate further, with oil markets are likely to feel the domino effect," said Barclays Capital.
Saudi Arabia is providing many of the additional barrels to the market to cover losses of production in Libya.