* Brent falls after China lifts bank reserves ratio
* Focus on ongoing Middle East, North Africa tensions
* March U.S. light crude <CLc1> contract expires Tuesday
* Weekend G20 meeting to address commodity price inflation
(Updates prices, adds contract expiry)
By Zaida Espana
LONDON, Feb 18 (Reuters) - Brent futures prices moved lower
on Friday after China increased lenders' reserve rates, while
political tensions continued to simmer in the Middle East and
North Africa.
China's increase in bank reserve requirements prompted fresh
worries about its oil demand growth, but analysts said the move
was not a surprise. []
"They have been trying to curb liquidity for some time, so
little surprise and not as bad as a benchmark rate rise, but
still slightly weighing on sentiment," said Andrey Kryuchenkov
from VTB Capital.
Brent crude futures <LCOc1> were 86 cents lower at $101.73 a
barrel by 1434 GMT, down from earlier highs of $103.5 a barrel.
The Brent and U.S. light crude benchmark future contracts
continued to show a discrepancy, with U.S. March light crude
future <CLc1> turning positive.
The front-month U.S. contract was up $1.06 at $87.42 a
barrel as investors looked to cover shorts ahead of the
contract's expiry on Tuesday, and before Monday's market holiday
in the United States. The U.S. light crude April future contract
<CLc2> was $1.36 stronger at $90.21 a barrel.
Tensions in the Middle East remained in focus after Egypt
said it had received a request for Iranian naval vessels to pass
through the Suez Canal on Friday, a move Israel's right-wing
foreign minister has described as "provocative." []
Libya deployed soldiers in the second city of Benghazi after
thousands of people took to the streets to protest about the
killing of more than 20 protesters, while thousands of Shi'ites
in Bahrain attended the burial of three of those killed in a
crackdown designed to quell protests. []
[]
"When social unrest and political upheaval erupts in the
biggest oil producing region of the globe it is not a wise
strategy to short energy," David Hufton from brokerage PVM wrote
in a note.
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G20 ALSO IN FOCUS
Investors also mulled data from the European Central Bank
showing that overnight emergency funding reached 16 billion
euros ($21.7 billion) on Friday, the highest level since June
2009. []
The news flagged fresh concerns over the health of the
European banking system as finance ministers and central bankers
from the Group of 20 meet in Paris to discuss the global economy
and commodity price inflation over the weekend. []
U.S. Federal Reserve Chairman Ben Bernanke, ECB President
Jean-Claude Trichet, the Bank of Japan's Masaaki Shirakawa, the
Bank of England's Mervyn King and People's Bank of China head
Zhou Xiaochuan were due to speak at an event in Paris at around
1430 GMT.
The debate concerning crude benchmarks continued as the
spread between Brent and U.S. light crude <CL-LCO1=R> came in to
$11.26 by 1429 GMT.
"The historic WTI-Brent spread of $1-$2 a barrel may have
shifted to a normalized negative differential of about $2-$3 a
barrel. Current physical market conditions in Cushing and in
Europe/Asia, however, have pushed the spread to historic lows of
$15-$20 a barrel" Deutsche Bank's chief energy economist Adam
Sieminski said in a note.
Nomura's Michael Lo argued the change in global oil demand
growth was playing a role in the weakness of U.S. light crude,
also known as West Texas Intermediate (WTI).
"Future oil demand growth will likely come from the Asia
Pacific region, and new refineries are being built in this
region to meet new demand. WTI plays almost no part in this
region, and the demand and supply dynamics are very different,"
Lo wrote in a note. "Brent is increasingly being recognised as a
crude benchmark in Asia."
(Additional reporting by Jennifer Tan in Singapore and Ikuko
Kurahone in London; editing by Jane Baird)
