UPDATE 4-U.S. crude oil hits 2.5-year high, Brent nears $120

                                
 * U.S. crude over $108.50/bbl, highest since September 2008
                                
 * Iran oil minister says no need for OPEC emergency meeting
                                
 * Technicals-US oil may retrace to $106.30 [ID:nL3E7F4023]
                                
 * Coming up: U.S. Employment Trends for March - 1400 GMT
 
                                
(Updates detail, comment, prices)
                                
 By Christopher Johnson
                                
 LONDON, April 4 (Reuters) - Brent crude rose towards $120 a
barrel and U.S. crude hit a 2-1/2-year high above $108 on Monday
as unrest in the Middle East and North Africa kept the focus on
oil supplies as economic growth bolstered demand for fuel.
                                
 Comments by Iran's oil minister that there was no need for
the Organization of the Petroleum Exporting Countries to hold an
extraordinary meeting helped support prices.
                                
 Iran is OPEC's leading oil price hawk and holder of the
cartel's rotating presidency in 2011. [ID:nHOS152087]
                                
 ICE Brent <LCOc1> rose $1.05 to a high of $119.75 a barrel,
its highest since Feb. 24, before slipping back to trade around
$119.30 by 0940 GMT.
                                
 U.S. crude <CLc1> was up 40 cents at $108.34 a barrel by
0940 GMT, after touching $108.78 earlier in the session, its
highest since September 2008.
                                
 Edward Meir, senior commodity analyst at brokers MF Global,
said investors seemed to be in no mood to sell the markets
despite the "less than compelling fundamental backdrop".
                                
 Analysts say the loss of oil from Libya has been more or
less offset by Saudi Arabia, while the Japanese crisis should
also reduce oil import demand, suggesting "there likely is a
statistical surplus in the system right now", Meir said.
                                
 "However, participants are not bothering with data for the
moment, as the focus remains on headlines out of the Middle
East. Moreover, the fact that global growth has yet to show any
significant sign of decelerating is also keeping the "buy
commodities" theme very much intact," he added.
                                
 The government of Libya -- the world's 17th-largest oil
producer and Africa's third-largest -- has sent an envoy to
Greece to discuss an end to fighting, but gave no signs of any
major climb down in a war that has ground to a stalemate between
rebels and forces loyal to Muammar Gaddafi. [ID:nLDE73300N]
                                
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
                                
 More on Middle East unrest:  [ID:nTOPMEAST][ID:nLDE71O2CH]
                                
 Libya Graphics               http://link.reuters.com/neg68r
                                
 Interactive graphic          http://link.reuters.com/puk87r
                                
 FACTBOX on Libya's oil production, click [ID:nLDE72U0ZR]
                                
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
                                
 
                                
 LOWER PRICE TARGETS
                                
 In Yemen, police using live rounds and tear gas wounded
hundreds of protesters marching on a presidential palace in the
Red Sea city of Hudaida on Monday in a sign of fraying nerves as
the political crisis deepened. [ID:nLDE7330FC]
                                
 Gulf Arab states have expressed concern over what they call
Iranian interference after Tehran objected to Saudi troops in
Bahrain and a spying row raised tensions. [ID:nLDE7320JI]
                                
 Bahrain has seen the worst unrest since the 1990s after
mostly Shi'ite protesters took to the streets in February,
inspired by uprisings that toppled leaders in Egypt and Tunisia,
to demand a bigger say in the Sunni-ruled country.
                                
 Saudi Arabia and Kuwait both said on Monday they thought oil
prices should ideally be below current levels.
                                
 Farouk al-Zanki, chief executive of Kuwait Petroleum Corp,
was quoted as saying $90 to $100 a barrel would be "the fair
price" for crude. [ID:nLDE7330CV]
                                
 A Saudi official told Reuters on Monday the country had not
changed its view of the optimal level for oil prices and was
still seeking $70 to $80 a barrel. [IDnWNA5294]
                                
 Carsten Fritsch, analyst at Commerzbank in Frankfurt, said
oil prices could fall later this year if the political situation
in the Middle East allowed worries over supply to ease.
                                
 "In the short-term, oil prices look very well supported," he
said. "The general market sentiment is positive. But we still
feel that prices will come down later this year once the supply
fears have dissipated."
                                
 Oil got a boost at the end of last week from strong U.S.
payrolls data. U.S. employment grew firmly for a second straight
month in March and the jobless rate hit a two-year low of 8.8
percent, fuelling optimism about oil demand. [ID:nNOAT00477]
                                
 The data helped push Asian shares to their highest in nearly
three years on Monday. China's stock, money, foreign exchange
and commodities futures markets were closed on Monday and
Tuesday for a public holiday. [ID:nL3E7F403C]
 (Additional reporting by Seng Li Peng in Singapore; editing by
Alison Birrane)