* Citigroup, Commerzbank raise oil price forecasts
* OPEC talking informally, sees no need to meet - delegate
* U.S. considers tapping emergency stocks to lower prices
(Updates prices)
By Alex Lawler
LONDON, March 7 (Reuters) - Brent crude rose as high as $118.50 a barrel and
U.S. oil hit its highest level since September 2008 on Monday on concern over
wider supply disruptions in the Middle East before both markets pared gains.
While the Libyan crisis has cut supply from a country that normally provides
almost 2 percent of world output, the prospect of unrest spreading to larger
producers such as Saudi Arabia is a far more bullish scenario for oil markets.
"The major risk remains the prospect of the political unrest spreading to
the Gulf producing region," said Caroline Bain, economist at the Economist
Intelligence Unit. "However, even if there is civil unrest in Saudi Arabia, it
is not a given that oil production will be affected."
Brent crude <LCOc1> gained 55 cents to $116.52 at 1528 GMT. U.S. crude
<CLc1> was up $1.04 at $105.46, having earlier risen as high as $106.95, the
highest since September 2008.
Oil traders in New York and London said prices had fallen back as some
participants decided to lock in profits and because of a rumour that Libyan
leader Muammar Gaddafi was preparing to leave Libya.
In Saudi Arabia, security forces have detained at least 22 minority Shi'ites
who protested last week against discrimination, activists said on Sunday, as the
kingdom tried to keep the wave of Arab unrest outside its borders.
[]
Citigroup and Commerzbank raised their oil price forecasts on Monday and the
latter is now looking for a Brent price of $120 in the second quarter, citing
the risk that disruption could spread in the Middle East.
RISK PREMIUM HIGH
Brent's highest this year is $119.79 reached on Feb. 24. The European
benchmark crude traded as high as $118.50 on Monday.
"Not only actual production losses but above all the threat of contagion
spreading to neighbouring regions will keep the geopolitical risk premium at a
high level for the time being," Commerzbank said in a report.
The rally in prices has prompted the Obama administration to consider
releasing emergency oil stockpiles as policymakers seek ways to contain a
negative spillover to the world's biggest economy. []
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For a FACTBOX on emergency oil stockpiles: []
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
OECD commercial oil stocks http://link.reuters.com/qyg48r
Brent and WTI open interest http://r.reuters.com/cag48r
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There has so far been no formal response from the Organization of the
Petroleum Exporting Countries, which has brushed off the need to meet before a
scheduled gathering in June.
OPEC ministers are holding informal consultations, but the group is not
planning to hold an emergency meeting, an OPEC delegate said on Monday.
[]
Libya, an OPEC member, usually produces 1.6 million barrels per day and its
output has been cut by as much as 1 million bpd, according to the International
Energy Agency.
(Additional reporting by Alejandro Barbajosa in Singapore and Karolin Schaps
in London; editing by Jason Neely)
