UPDATE 10-Brent off 2-1/2-year highs as Saudis lift output

                                
 * Saudi Arabia raises output by about 700,000 bpd
                                
 * Key Libyan oil terminal falls into rebel hands
                                
 * Gaddafi opponents fight Libyan security forces
 (Recasts, updates prices, market activity, adds graphics
link)
                                
 By Gene Ramos
                                
 NEW YORK, Feb 25 (Reuters) - Brent crude rose in volatile
trade on Friday, holding above $112 a barrel but below
2-1/2-year highs after top oil exporter Saudi Arabia raised
output to calm fears of supply disruptions sparked by the
uprising in Libya.
                                
 Saudi Arabia has boosted output more than 700,000 barrels
per day, to a level exceeding 9 million bpd, a senior industry
source familiar with Saudi production told Reuters.
[ID:nLDE7101KA]
                                
 Trading was volatile as investors worried about the
worsening situation in Libya, where oil outages have risen to
as high as three quarters of its 1.6 million bpd output.
                                
 A late bout of short-covering ahead of the weekend had kept
prices higher, though still below early highs, traders said.
                                
 "I don't think many traders are comfortable  being short
over the weekend," said Tom Bentz, broker at Paribas Commodity
Futures in New York.
                                
 Estimates of the supply loss could not be confirmed,
however, with conditions unsettled with rebels fighting to
wrest control of oilfields and terminals in eastern Libya from
loyalists to leader Muammar Gaddafi. [ID:nLDE71O1OO]
                                
 "Fears that the unrest in Libya could turn into a civil war
and wipe out its oil production have been offset by assurances
from Saudi Arabia that it is raising output," said Gene
McGillian, analyst at Tradition Energy in Stamford,
Connecticut.
                                
 On Thursday, the Libyan output disruptions pushed Brent to
almost $120 and U.S. crude to more than $103, with Brent
shooting ahead as more of Libya's oil exports go to European
refiners than to those in the United States.
                                
 In London, Brent crude futures <LCOc1> for April were up 82
cents at $112.18 a barrel by 2 p.m. EST (1900 GMT) on Friday,
off the session high of $113.91. They touched $119.79 on
Thursday, the priciest since August 2008.
                                
 U.S. crude futures <CLc1> for April rose 82 cents to
$98.10, off a $99.20 high touched earlier in the day. They hit
$103.41 on Thursday, the highest since September 2008.
                                
 Brent's premium against U.S. crude <CL-LCO=R> rose above
$15 a barrel from $14 on Thursday, when the Brent spread
against U.S. benchmark West Texas Intermediate rocketed to a
record $16.91.
                                
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 Brent graphic: http://link.reuters.com/tuf38r
                                
 Unrest in Mideast, N. Africa:             [ID:nLDE71M1AF]
                                
 Interactive factbox        http://link.reuters.com/puk87r
                                
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 U.S. crude oil was helped by data showing consumer
confidence hit a three-year high in February, suggesting the
economy remained on solid footing despite soaring gasoline
prices, according to the latest ThomsonReuters/University of
Michigan survey. [ID:nN25247775]
                                
 That optimism was tempered by the latest reading of the
fourth quarter 2010 economic growth, which showed that the U.S.
economy grew more slowly than expected.
 (Additional reporting by Ikuko Kurahone and Nia Williams in
London, Randy Fabi in Singapore; Editing by David Gregorio)