* Worries renew over Middle East supply disruption
* Thin trade ahead of U.S. holiday adds to volatility
* For a 24-hour technical outlook on oil:
* http://graphics.thomsonreuters.com/WT/20112102091920.jpg
* Coming up: European PMI data, German business climate
By Francis Kan
SINGAPORE, Feb 21 (Reuters) - Oil jumped by over $1.00 a
barrel on Monday, as violent clashes in OPEC-member Libya
heightened fears of social unrest spreading across the Middle
East and North Africa and disrupting supplies in the major
oil-producing region.
Protests against Muammar Gaddafi, leader of Libya which
produces 1.58 million barrels per day of crude, spread to the
capital Tripoli and his son vowed to fight until the "last man
standing", after scores of protesters were killed in the eastern
city of Benghazi.
Brent crude for April delivery rose $1.02 to $103.54
a barrel by 0340 GMT, its intra-day high. On Friday, Brent
settled at $102.52, its fourth-straight weekly rise.
U.S. crude for March delivery rose $1.10 to $87.31 a
barrel, after hitting a high of $87.63.
"I would be worried if the unrest spreads to Saudi Arabia,"
said Benson Wang of Commodity Broking Services in Sydney.
The leader of the Al-Zuwayya tribe in eastern Libya
threatened on Sunday to cut oil exports to Western countries
within 24 hours unless authorities stop what he called the
"oppression of protesters".
Other analysts fear that continued violence in Libya and
tensions across the region could lead to further price hikes,
issues which are likely to dominate talks in Saudi Arabia this
week aimed at narrowing the gap between consumer nations and
resource-holders.
"The oil market could easily jump another $10 in a short
time if the violence continues," said David Cohen, Director of
Asian Economic Forecasting at Action Economics.
Monday's U.S. President's day holiday also led to increased
volatility in U.S. crude prices, as Asian traders were reluctant
to hold on to short positions till trading restarts in the
United States on Tuesday.
"Some buying to cover short positions would have pushed
prices up," Wang said, referring to activity due to the holiday.
"The fundamentals don't support the increase in WTI."
Short-covering ahead of the contract's expiry on Tuesday
also helped to pull prices higher.
The spread between the two grades <CL-LCO1=R> narrowed by
about 80 cents to $12.20 by 0342 GMT, after settling at a record
of $16.27 a barrel last week.
Revolutions which deposed the presidents of Tunisia and Egypt
have shaken the Arab world and inspired protests across the
Middle East and North Africa, threatening the grip of
long-entrenched autocratic leaders.
In the Gulf kingdom of Bahrain, thousands of protesters
gathered in a square in Manama, calling for political change and
awaiting promised talks with the island's Sunni rulers.
Concerns over Middle East oil supplies helped prices recover
from early weakness after China raised its banks' reserve
requirements last Friday for the second time this year to combat
rising inflation.
Investors are worried that the move will rein in the
country's oil demand growth, although in the longer-term the
move was seen as a positive measure to control inflation,
analysts said.
And on Monday, a survey showed that the steady ratcheting-up
of monetary tightening has combined with the Lunar New Year
holiday to weigh on China's factories in February, even as
inflation has continued to accelerate.
Finance ministers of the world's major economies signaled
concerns over rising commodity costs driving inflationary
pressures globally and reached a fudged accord on Saturday on
how to measure imbalances in the global economy.
Asian stocks eased on Monday on China's policy tightening
and worries over the Middle East unrest.
Concern that a breathtaking rally in U.S. stocks in recent
weeks, which has boosted the region's developed markets such as
Australia and Tokyo , may be nearing an end also
weighed on sentiment.
The dollar index , which tracks the greenback's
performance against a basket of major currencies, slipped 0.04
percent to 77.632 by 0211 GMT.
(Editing by XXXXX)
