UPDATE 10-Oil surges to near $120, then eases on Saudi assurance

                                
 * ENI estimates Libyan output has fallen by 1.2 mln bpd
                                
 * Saudi Arabia in talks with European refiners on supplies
                                
 * EIA data show lower-than-expected build in US oil stocks
                                
 (Recasts, updates throughout, changes dateline from
previous LONDON)
                                
 NEW YORK, Feb 24 (Reuters) - Oil surged to 2-1/2-year highs
near $120 a barrel on Thursday as the revolt in Libya choked
exports, then eased as Saudi Arabia assured European refiners
the kingdom could step in to fill any supply shortfalls.
                                
 Brent crude jumped 7.5 percent as the revolt in Libya cut
off up to three quarters of the OPEC nation's 1.6 million
barrels per day of production, according to Italian oil company
ENI, a top player in Libya's oil sector. [ID:nLDE71N13X]
                                
 Oil markets, on edge that the unrest that has swept across
Northern Africa could spread to other oil-producing countries,
eased on news top OPEC exporter Saudi Arabia was in talks with
European refiners affected by the disruption. [ID:nLDE71N13Q]
                                
 Forces loyal to Muammar Gaddafi launched a fierce
counter-attack, fighting gun battles with rebels who have
threatened the Libyan leader by seizing important towns close
to the capital and key Libyan oil and oil product terminals.
[ID:nLDE71N009]
                                
 "Saudi efforts to assuage supply concerns are definitely
weighing on prices and if Qaddafi's next move is out of the
country, I would expect more down side," said John Kilduff, a
partner at of Again Capital LLC.
                                
 Brent crude <LCOc1> traded up $3.04 to $114.29 a barrel at
12:21 EST (1721 GMT), after hitting $119.79 earlier, the
highest level since August 2008. U.S. crude rose <CLc1> $1.26
to $99.36 a barrel, after toughing $103.41, the highest since
September 2009.
                                
 The stronger gains in Brent pushed its premium to U.S. oil,
which has been weighed down by high inventories at the Cushing,
Oklahoma delivery point for the New York Mercantile Exchange's
U.S. oil contract, out by more than at dollar to over $14 a
barrel.
                                
 Crude found also found some support after the U.S. Energy
Information Administration (EIA) showed a lower-than-expected
build in domestic crude inventories and hefty drawdowns in
gasoline and distillate stocks last week. [ID:nN24265704]
                                
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 Graphics on crude prices, volumes and outlook:
                                
 http://link.reuters.com/pab38r
                                
 http://link.reuters.com/pab38r
                                
 http://link.reuters.com/nab38r
                                
 US oil price rise graphic: http://link.reuters.com/byv28r
                                
 Unrest in MidEast, N. Africa:             [ID:nLDE71M1AF]
                                
 Analysis on impact on Libyan oil sector:  [ID:nN23138693]
                                
 Factbox on Libyan oil and gas:            [ID:nLDE71K0RV]
                                
 Interactive factbox        http://link.reuters.com/puk87r
                                
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 (Reporting Matthew Robinson, Gene Ramos in New York;
Christopher Johnson, Nia Williams, Emma Farge, Claire Milhench
and Dmitry Zhdannikov in London)