* Worries 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
(Adds analyst comments, background, technicals)
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
exports around 1.1 million barrels per day (bpd) 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 $1.25 to an
intraday high of $103.77 a barrel by 0545 GMT. On Friday, Brent
settled at $102.52, its fourth-straight weekly rise.
U.S. crude for March delivery rose $1.19 to $87.39 a
barrel, after hitting a high of $87.63 earlier.
"In the short-term there would be a negative impact. There
will be chaos and a real concern that supply could be disrupted
in Libya," said Tony Nunan, a risk manager with Tokyo-based
Mitsubishi Corp.
"The bigger issue is if it spreads to Saudi Arabia," he
added.
The head 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", while Libya's ambassador to India quit in protest
at his government's violent crackdown and called for Gaddafi's
ouster, the BBC reported.
On Monday, hundreds of Libyans attacked a South Korean
construction site in Tripoli, injuring at least four foreigners,
the Korean foreign ministry said.
Libya produces 1.58 million bpd of crude in January,
according to a Reuters poll. The country was the
world's 12th biggest oil exporter in 2009 and has total proven
oil reserves of 44 billion barrels as of January 2010, the
largest in Africa, data from the U.S. Energy Information
Administration (EIA) showed.
Crude production among OPEC countries in Africa and the
Middle East stood at 27.2 million bpd last month, or more than
90 percent of the group's total, the International Energy
Agency's (IEA) latest monthly oil report said.
Analysts fear the popular revolt in Libya and revolutions
across the region, which deposed the presidents of Tunisia and
Egypt, could trigger further price hikes, issues likely to
dominate talks in Saudi Arabia this week aimed at narrowing the
gap between consumer nations and resource-holders.
In the kingdom of Bahrain, thousands gathered in a square in
Manama, calling for political change and awaiting promised talks
with the island's Sunni rulers.
"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," said Benson Wang of Commodity Broking Services in
Sydney, 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 67 cents to $12.31 by 0458 GMT, after settling at a record
of $16.27 a barrel last week.
Technically, Brent remains technically neutral as it is
range bound between $101.50 and $104.50, according to Reuters
market analyst Wang Tao.
MIDEAST TENSIONS OFFSET CHINA MOVES
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 worry that the move will rein in the country's oil
demand growth, although in the longer-term it 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,
fears over the Middle East and concern that a rally in U.S.
stocks in recent weeks, which has boosted the region's developed
markets, may be nearing an end.
The dollar index , which tracks the greenback's
performance against a basket of major currencies, edged up 0.05
percent to 77.705 by 0500 GMT.
(Editing by Ramthan Hussain)
