* Worries over potential supply disruption ease
* Focus returns to macro-economic fundamentals
* Coming Up: U.S. retail sales, consumer prices, China
inflation
By Jennifer Tan
SINGAPORE, Feb 14 (Reuters) - U.S. oil prices rebounded on
Monday to near $86 a barrel, after sinking to a 10-week low in
the previous session, as tensions in the Middle East region
dissipated following the resignation of Egyptian President Hosni
Mubarak.
London crude prices extended their rally to near $102 a
barrel, after the March contract expired with a gain in the
previous session.
Mubarak's departure, after 18 days of mass protests,
relieved fears over potential supply disruptions and the spread
of turmoil to key oil producers in the Middle East region.
"Concerns over a potential disruption to supplies have
eased, and now that the immediate threat is out of the way, the
market will start focusing again on macroeconomic fundamentals,"
said Ben Westmore, a commodities analyst with National Australia
Bank.
U.S. crude for March delivery gained 5 cents to
$85.63 a barrel by 0250 GMT, after settling $1.15 lower at
$85.58 a barrel on Friday, the lowest close in 10 weeks and down
3.89 percent on the week.
Brent crude for April delivery rose 66 cents to
$101.60 a barrel, after settling at $100.94 a barrel in the
previous session. The expired March contract has risen 56 cents
to settle at $101.43 a barrel, off its $102.03 intraday peak.
The spread between the two grades <CL-LCO1=R> narrowed by
about $4 to $12.24 after settling at a record of $16.27 a barrel
in the previous session.
Westmore expects U.S. crude prices to hold in the mid-$80 a
barrel range this week, while Brent prices are expected to stay
in a range of $98-$102 a barrel.
Traders will scour a raft of U.S. economic data, including
retail sales and consumer prices, due this week for more cues,
as well as Chinese inflation numbers, scheduled for release on
Tuesday.
Analysts polled by Reuters expect inflation in the world's
second-largest energy consumer to accelerate to 5.3 percent from
4.6 percent.
A stronger-than-expected reading could fuel worries that
China will have to hike interest rates more aggressively,
raising the spectre of slower growth.
In the Middle East, Egypt's new military rulers dissolved
parliament and suspended the constitution on Sunday, but said
they would govern only until elections to replace ousted
president Hosni Mubarak, possibly in six months.
But analysts warn that financial markets could remain under
pressure as uncertainty looms over the next phase of Egypt's
political transition and its potential spillover effects to the
broader Middle East.
On the supply side, monthly reports from both the
International Energy Agency and OPEC this week showed higher
production from OPEC nations, but they expect global demand to
keep rising.
U.S. stocks closed out their second straight week of gains
on Friday with a rally sparked by Mubarak's resignation, while
Asian stocks rose on Monday as investors greeted the same news
with relief.
With the euro weakening on Monday on renewed concerns over
the euro zone debt crisis, the dollar inched up 0.07 percent
against a basket of major currencies .
(Reporting by Jennifer Tan; Editing by)
