* Brent crude jumps 7.7 percent to 28-month high
* Disruption in Libya has cut more than 25 pct of production
* Analysts eye contagion of unrest in the region, eye on
Saudi
* Surge in oil spooks metals, grains investors
(Updates prices, adds analyst comments)
By Nick Trevethan
SINGAPORE, Feb 24 (Reuters) - Brent crude jumped almost $7
in 90 minutes on Thursday, hitting its highest since August 2008
and sending a shiver of fear through other commodity markets
worried about the economy-sapping effect of high energy prices.
Brent crude on Thursday rallied as much as $8.54 a
barrel to a peak of $119.79. Brent has risen around 15 percent
in four days.
Reuters market analyst Wang Tao says technical charts show
Brent could be on course for a rise to $158 per barrel in 2011,
well above its 2008 high of $147.50, while he expects U.S. crude
to touch $159 per barrel.
"The situation in the Middle East is causing a lot of
uncertainty in the market now, the risk of disruption to major
producers in the region is what every investor is watching now,"
said Ken Hasegawa, a commodity derivatives manager at Newedge
brokerage in Tokyo.
Disruption stemming from the revolt in the world's No. 12
exporter Libya has cut at least 400,000 barrels per day (bpd) of
the country's 1.6 million bpd output, according to Reuters
calculations.
Gold prices were another rare gainer, with spot
bullion up 0.1 percent to $1,412.90 an ounce, benefiting
from the jitters generated by unrest in the Middle East.
"People don't have much confidence that the Libya crisis
will be settled any time soon, so a lot of them are betting on
gold," said a dealer in Singapore, "Gold will be king."
Investors are concerned that the political upheaval that
spread from Tunisia to Egypt and further eastwards to Bahrain,
Yemen, Oman and Djibouti, and westwards to Morocco, could also
infect bigger oil producers like Saudi Arabia, Nigeria and Iran.
Base metals reversed early gains, with copper turning from a
1 percent rally to a 1 percent loss as oil prices leapt.
Three-month copper on the London Metal Exchange fell
$95 to $9,330 a tonne by 0805 GMT, after having touched $9,326
earlier, it weakest in almost a month.
"Metals have decoupled from energy in recent days and the
market is obviously worried about the inflationary impact of oil
prices," said Edward Meir, analyst at MF Global in New York.
"Energy prices are going higher with daily news of falling
exports from Libya, but something has to give - either Gaddafi
will be overthrown, which seems likely or the Saudis will pump
more oil. Either way we should see a dip in oil and rallies in
metals."
The turmoil in Libya continued, as thousands of Libyans
celebrated the liberation of the east of the country from the
rule of Muammar Gaddafi, who has vowed to crush the revolt.
"These are pivotal times for markets. I am very worried about
what higher energy and food prices will mean for disposable
incomes from China to America," a metals trader in Singapore
said.
"If we see sustained, higher prices for oil and other
staples, it has the potential to severely limit the demand
growth that the rally in copper especially was built upon."
Deutsche Bank said on Thursday oil above $120 a barrel would
be an inflection point for global economic growth.
"It (oil) is certainly edging closer to a level that is
viewed by our colleagues as a key threat to global growth,"
Deutsche said in its morning fixed income research note.
"$120/barrel is the level that oil as a share of global GDP
starts to move above 5.5 percent of GDP, which has historically
been an environment where global growth has come under
pressure."
U.S. wheat gained around half a percent on Thursday in its
second successive daily rise, driven by strong demand and
tenders issued by importers in Africa and the Middle East.
Corn was little changed, while soybeans slipped 0.4 percent
in cautious trade with the unrest in North Africa keeping
investors on edge.
"I think buyers who had been waiting for a correction
certainly seem to be jumping on this opportunity which is
providing support to the market," said Adam Davis, a senior
grains trader at Melbourne-based Merricks Capital.
"We are waiting to see if there is going to be any more fund
selling in the next few days as financial flows are key."
(Reporting by Nick Trevethan; Editing by Manash Goswami)
