* Brent falls by as much as 1.2 pct to $112.53 a barrel
* Japan's fuel oil demand may rise to compensate for reactor
shutdowns
* Gaddafi forces fight for control of Brega oil port
(Adds context, background and comments on Japan's oil demand)
By Alejandro Barbajosa
SINGAPORE, March 14 (Reuters) - Brent crude on Monday fell
by as much as 1.2 percent to below $113 on investor pessimism
that economic growth will slow in the wake of Japan's earthquake
and tsunami, while easing unrest in the Middle East threw the
focus back onto ample oil supplies.
Price of U.S. natural gas rose almost 1 percent on
expectations that Japan will need to buy significant amounts of
fossil fuel to compensate for the loss of an estimated 9,700
megawatts (MW) of nuclear power generating capacity after the
8.9-magnitude tremor on Friday.
April Brent fell as much as $1.31 to $112.53 and was
down 89 cents at $112.95 at 0106 GMT. It slid $1.59 on Friday,
when Japan's strongest earthquake on record shut refineries and
other industrial plants in the world's third-largest oil
consumer. U.S. crude fell $1.23 to $99.93.
"If you discount what has happened in the Middle East,
events in Japan are negative for growth," said Jonathan Barratt,
managing director at Commodity Broking Services in Sydney.
Police presence across cities in top oil exporter Saudi
Arabia sputtered planned "day of rage" protests on Friday, while
in neighbouring Bahrain the crown prince offered assurances of
national dialogue on Sunday after police fired tear gas and
water cannon at demonstrators.
"The day of rage wasn't so bad, and these are all concerns
that are in the background. Japan is more real," Barratt said.
Arab countries appealed to the United Nations on Saturday to
impose a no-fly zone on Libya as government troops backed by
warplanes fought to drive rebels from remaining strongholds in
western Libya.
Muammar Gaddafi's troops battled rebel fighters for control
of the strategic Libyan oil town of Brega on Sunday, as France
promised to push harder for a UN-backed no-fly zone over what
used to be Africa's third-largest oil producer, before a civil
war slashed output by at least two-thirds.
Saudi Arabia and other OPEC producers have increased
production, partly to offset the drop in Libyan exports.
Japan battled on Monday to prevent a nuclear catastrophe and
to care for millions of people without power or water in its
worst crisis since World War Two, following Friday's natural
disaster, which is feared to have killed more than 10,000
people.
Japanese automakers and electronics firms shut key
factories, underscoring the challenge facing the government as
it rushes to limit the economic blow.
"A disaster like this requires quick action from Japanese
authorities and may hamper near-term growth prospects in Japan,
although it is unlikely to significantly impact the global
economic outlook," said Ben Le Brun, an analyst at CMC Markets.
Nikkei futures on the Osaka Stock Exchange fell 7
percent from Friday's regular session while Japanese government
bond prices jumped more than a half point at opening after Japan
suffered its strongest earthquake in its modern history.
Japan will move quickly to import more liquefied natural gas
(LNG) and low-sulphur fuels to generate power at thermal plants
and replace nuclear electricity supplies.
The country's demand for fuel oil at power plants was also
set to rise, while in the longer-term consumption of distillates
including diesel would also increase for reconstruction.
"The market perhaps is overdoing it," Barratt said. "If you
look at the concerns of nuclear power, they are going to have to
shift to thermal- or oil-powered generation. Then, that should
support oil."
The front of the Brent forward curve was flat and close to
reverting into contango, a structure denoting reduced urgency
for supplies in the near term compared to future ones, after
front-month Brent commanded a premium of as much as 50 cents
over the second month as recently as mid-February.
