REUTERS SINGAPORE FOSSIL fuels may rise on Monday as energy will be in focus with investors more concerned about how Japan will replace lost electricity generation capacity than the negative impact of Friday’s cataclysmic earthquake on the economy.

But at the same time, volumes may remain small at the start of trade as the market might look for clearer direction after Friday’s broad-based selloff and await answers on how quickly Japan would be able to stabilise operations at its power plants and refineries.

Following the magnitude 8.9 earthquake and devastating 10-meter tsunami that has shut down ports, power plants and refineries, the immediate reaction of many investors was to extend the week’s sell-off across the commodities sector, leading to the biggest decline since last July .

Brent and WTI oil prices fell on Friday — Brent shed 3 percent and hit a low of $112.25 a barrel, while WTI dipped below $100 for the first time since early March on worries about demand from the world’s thirdlargest economy and oil importer.

“In the shorter to medium term, expect to see a lot more fossil fuel going to Japan.

From as early as Monday we are likely to see a rise in LNG, oil and coal as the market gears up for greater Japanese demand,” said Jonathan Barratt, managing director of Commodity Broking Services.

“But there is a longer term story, too.

The problems at their nuclear power plants are even more alarming.

A serious accident could sway opinion against the industry putting the focus on fossil fuels again.” The dilemma for energy investors centers upon Japan’s stricken nuclear reactors.

Japan faced a fresh radiation threat on Sunday after the cooling system failed at a second reactor in what could be the world’s worst nuclear disaster in 25 years.

The previous day, thousands were evacuated following an explosion and leak from the facility’s No 1 reactor in Fukushima, 240 km (150 miles) north of Tokyo.

Strong aftershocks continued to shake Japan’s main island as the desperate search pressed on for survivors from Friday massive earthquake and tsunami and the death toll was expected to rise.

Media reports say it is likely to exceed 1,800.

Nuclear plant operator Tokyo Electric Power said radiation levels around the Fukushima Daiichi plant had risen above the safety limit but it did not mean an “immediate threat” to human health.

Japan may be forced to import more fuel oil, LNG or coal.