UPDATE 12-Oil jumps as Libya clashes intensify; Mideast worry

                                
 * Rebels clash with Gaddafi forces in key oil city
                                
 * Bahrain, Yemen, Oman protests raise Saudi worries
                                
 * U.S. payrolls rise more than expected in February
                                
 * Hedge funds hike long positions 30 pct to all-time high
                                
 (Recasts, adds detail throughout, CFTC net-longs report)
                                
 By Robert Gibbons
                                
 NEW YORK, March 4 (Reuters) - Brent oil prices pushed above
$116 a barrel and U.S. oil jumped more than $3 to its highest
since September 2008 on Friday, as fighting in Libya worsened
and protests in the Middle East intensified.
                                
 Investors piled into the oil market fearing extended supply
disruptions in Libya as rebels fought security forces in Ras
Lanuf, a major oil terminal. And growing unrest in Bahrain and
Yemen ratcheted up anxiety over Saudi Arabia, where Saudi
Shi'ites staged protests on Thursday. [ID:nLDE7230U9]
[ID:nLDE7222CA]
                                
 Prices closed out a second big weekly gain with news that
hedge funds and big speculators had increased their bullish
bets on U.S. oil prices by over 30 percent in the week to March
1, taking their net long position to a record high as they
braced for further turbulence in the region. [ID:nN04234225]
                                
 "Tension in the Middle East is like a runaway train," said
Michael Hewson, an analyst at CMC Markets in London. "Once it
starts, it's very difficult to stop. And if there is a danger
that it impacts the supply chain, people will understandably
get nervous."
                                
 Brent crude futures for April delivery <LCOc1> rose $1.18
to settle at $115.97 a barrel, having reached a high of
$116.49. Brent posted a 3.4-percent gain for the week, after
rising 9.4 percent last week.
                                
 U.S. crude for April delivery <CLc1> rose $2.51 to settle
at $104.42 a barrel, the highest close since September 2008.
                                
 West Texas Intermediate crude outpaced Brent for a third
day, thanks to an upbeat U.S. jobs report and as traders took
profits on short positions in the Brent/WTI spread <CL-LCO1=R>
after it hit a record $16.91 last week.
                                
 Brent's premium to its U.S. counterpart <CL-LCO1=R> fell
$1.33 to $11.55 a barrel, based on settlement prices,
continuing to retreat from last week's record $16.91. U.S.
crude late reached a high of $105.17 in after-hours trade.
                                
 The U.S. move was aided by data showing U.S. nonfarm
payrolls rose more than forecast in February, hitting a
nine-month high, and the jobless rate slipped to a nearly
two-year low of 8.9 percent. [ID:nOAT004757]
                                
 News of refinery maintenance in Europe that will help
offset the loss of Libyan crude also weighed on Brent.
[ID:nLDE723157]
                                
 LIBYA CLASHES INTENSIFY
                                
 Libyan leader Muammar Gaddafi's forces battled rebels on
several fronts as the country's crisis worsened and unrest
erupted in the capital. [ID:nLDE72300M]
                                
 Rebels drove Gaddafi's forces from Ras Lanuf and have taken
the eastern oil town, two rebel soldiers told Reuters by
telephone. [ID:nLDE723204]
                                
 Al Jazeera television reported that an oil facility at
Zueitina, south of Benghazi was damaged and on fire.
[ID:nLDE7231HJ]
                                
 Estimates of how much Libyan oil output is shut continued
to creep higher, with the International Energy Agency revising
up its estimate to 1 million barrels per day (bpd).
[ID:nWEB3662]
                                
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
                                
 Reuters Insider show on Libyan oil company head interview:
                                
 http://link.reuters.com/jys38r
                                
 Graphics showing:
                                
 Middle East unrest             http://r.reuters.com/nym77r
                                
 Oil price shocks               http://r.reuters.com/qes28r
                                
 Countries most reliant on oil  http://r.reuters.com/dux28r
                                
 Brent and WTI open interest    http://r.reuters.com/cag48r
                                
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
                                
 MIDDLE EAST UNREST
                                
 The unrest that has catapulted oil prices to well over $100
a barrel, threatening to stoke inflation and endanger global
growth, appeared to gather pace in countries adjacent to Saudi
Arabia, the world's biggest exporter.
                                
 Demonstrations swelled into hundreds of thousands in Yemen,
where President Ali Abdullah Saleh rejected an opposition plan
for him to transfer power this year. [ID:nLDE7230NU]
                                
 Fighting between Sunni and majority Shi'ite Muslims in
central Bahrain injured several people overnight in the first
sectarian violence since protests erupted in the Sunni-ruled
kingdom two weeks ago. [ID:nLDE7230U9]
                                
 Analysts have warned of the growing risk that such strife
could spill across the border, and oil markets were unsettled
by news a day ago of small crowds of Saudi Shi'ites staging
protests in two towns in Saudi Arabia's oil-producing Eastern
Province [ID:nLDE7222CA]
                                
 Hundreds of Omanis demanding jobs and political reforms
demonstrated across the Gulf Arab sultanate, a small oil
producer. [ID:nLDE7231B7]
 (Additional reporting by Gene Ramos in New York, Claire
Milhench in London and Florence Tan in Singapore; Editing by
Marguerita Choy)