Brent oil price trading lower on JAL Japan Airlines

ICE Brent crude oil futures price fell by more than one percent on Wednesday, pressured by a sell off maybe linked to the bankruptcy filing of Japan Airlines (JAL) the contract slipped below key technical support at the 50 day moving average.

“We still are classing gains as potential selling opportunities,” said FuturesTechs analyst Clive Lambert, following the contract’s brief bounce on Tuesday. The 50-day moving average is currently at $76.98 a barrel. March Brent oil futures was trading down $1.05 at $76.58 by 1249 GMT. The March/April Brent spread was at 75 cents. March Brent’s discount to March US crude was $1.71 per barrel. Brent support was at $74.40 a barrel, resistance at $78.00.

Brent crude oil futures for March delivery dropped as much as $1.73, reaching $75.37 a barrel, the lowest in three weeks. The contracts later recuperated some of their losses.

Oil traders in New York and London said some of yesterday’s selling in the oil market was likely linked to JAL’s oil hedges. “This is a forced liquidation,” said one oil analyst of the selling. “And it needs to happen as soon as possible.”

JAL had made extensive use of oil derivatives, linked mostly to the Brent oil market, in order to hedge against its future fuel costs. According to the latest data, JAL had hedged at least 78 per cent of its fuel consumption for the year ending March 31 2010.

Tags:  airlines, bankruptcy, brent oil price, ICE, JAL, Japan, oil, sell, trading