* Mid-East protests reignite fears of supply crunch
* China inflation lower than expected but rate hikes loom
* Coming Up: US retail sales, API weekly inventory data
(Updates with prices)
By Jennifer Tan
SINGAPORE, Feb 15 (Reuters) - London crude prices extended
gains on Tuesday to stand above $103 a barrel, buoyed by signs
of firm oil demand in China as unrest in the Middle East sparked
fears of a potential supply disruption.
U.S. crude rebounded above $85 a barrel, after falling to
2-1/2-month lows in the previous session, pressured by high
stockpiles at Cushing, Oklahoma.
Economic and industry data due later in the day -- U.S.
weekly crude inventories from the American Petroleum Institute
(API) and January retail sales -- will offer more trading cues
for the market.
"Middle East tension will continue to support prices in the
near term, but if that subsides, fundamentals will reassert
themselves very quickly, with a lot of pressure emerging on the
sellside," said Ben Le Brun, an analyst with CMC Markets in
Sydney.
"There are still a lot of inventories in the U.S., and OPEC
ministers have said previously that the market remains
well-supplied."
Brent crude for April delivery rose 31 cents to
$103.39 a barrel by 0600 GMT, after settling at $103.08 a barrel
in the previous session, off an earlier 29-month peak of
$104.30.
U.S. crude for March delivery gained 38 cents
to $85.19 a barrel, after settling 77 cents down at $84.81 a
barrel. The contract had fallen to $84.58 earlier, the lowest
intraday price since Dec. 1.
The spread between the two grades was above $14, after
hitting a record of $16.27 a barrel last week.
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Although tensions eased after Egyptian President
Hosni Mubarak stepped down and gave power to the army last week,
protests in neighbouring Iran, Yemen and Bahrain and Algeria
reignited fears of potential supply disruptions in other
oil-producing nations.
Iranian security forces were deployed in Tehran to prevent
an opposition rally, while government backers chased down
pro-reform demonstrators in Yemen's capital, turning unrest
increasingly violent. Bahraini police fired tear gas and rubber
bullets to break up protests in villages ringing the capital
Manama.
Also boosting crude prices were signs of robust demand in
China, the world's second-largest crude importer, which consumes
one-tenth of global supplies.
The country's January crude oil imports rose 27 percent from
a year-ago to the fourth highest on record, as refiners raised
production and beefed up diesel inventories to fight a drought.
China's consumer price data released earlier on Tuesday
showed inflation was lower than expected at 4.9 percent in the
year to January, but signs of a continued rise in price
pressures reinforced expectations the central bank would stick
to its course of monetary tightening.
A Chinese government think-tank said in a report on Tuesday
Beijing is prepared to increase interest rates and banks'
required reserve ratios further in 2011.
In the United States, crude oil inventories are likely to
have risen for the fifth straight time last week as imports
rebounded, a Reuters poll showed on Monday ahead of the weekly
reports.
Industry group American Petroleum Institute will release its
inventory data on Tuesday at 4:30 p.m. EST or 2130 GMT and the
Energy Information Administration will issue its report on
Wednesday at 10:30 a.m. EST.
The Commerce Department will release January retail sales at
1330 GMT later, and economists are expecting a rise of 0.6
percent.
The dollar index , which tracks the greenback's
performance against a basket of major currencies, edged up 0.17
percent to 78.592. The index hit a three-week high of 78.873 and
after the euro fell to a three-week low on worries over the euro
zone's fiscal woes.
(Reporting by Jennifer Tan; Editing by Clarence Fernandez)
