* Report that strike stops output at Libya oilfield
* Concern grows over Middle East, North Africa supply
disruption
* For a 24-hour technical outlook on oil:
* http://graphics.thomsonreuters.com/WT/20112102091920.jpg
* Coming up: European PMI data, German business climate
(Updates prices, freeing of Saudi Arabian prisoners)
By Francis Kan
SINGAPORE, Feb 21 (Reuters) - Brent crude rose more than $2
a barrel on Monday after a report that workers at an oilfield in
OPEC-member Libya were on strike as violent unrest gripped the
country.
Concern of oil supply disruption has bouyed prices as
protests spread across the oil-producing Middle East and North
Africa.
A strike had stopped output at Libya's Nafoora oilfield, Al
Jazeera reported.
Brent crude for April delivery rose $1.73 to $104.25
a barrel by 0803 GMT, after surging to as much $104.60, a 2-1/2
year high. On Friday, Brent settled at $102.52, its
fourth-straight weekly rise.
U.S. crude for March delivery rose $1.40 to $87.60 a
barrel.
Libya exports around 1.1 million barrels per day (bpd), and
on Sunday a tribal leader in the country threatened to cut the
flow within 24 hours if a government crackdown on protestors
continued.
"There is 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."
Protests across the region have deposed the presidents of
Tunisia and Egypt. Top oil exporter Saudi Arabia has to date
seen only low-key protests.
Protests against Libyan leader Muammar Gaddafi 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.
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.
"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.
Libya produced 1.58 million bpd of crude in January,
according to a Reuters poll. It holds Africa's largest
oil reserves and was the world's 12th biggest oil exporter in
2009, data from the U.S. Energy Information Administration (EIA)
showed.
Concern about the potential for oil supply outages across
the region and further price rises were likely to dominate talks
in Saudi Arabia this week aimed at narrowing the gap between
consumer nations and resource-holders.
Saudi's neighbour Bahrain saw thousands gathered in a square
in the capital Manama, calling for political change and awaiting
promised talks with the island's rulers.
Thin trading volume due to the U.S. President's day holiday
led to increased volatility in U.S. crude prices. Short-coveirng
ahead of the contract's expiry, and with traders reluctant to
hold shorts due to the situation in Libya and beyond, also
supported the market.
"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 spread between U.S. crude and Brent <CL-LCO1=R> narrowed
to $12.47 by 0756 GMT, after settling at a record of $16.27 a
barrel last week.
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.
The steady tightening of monetary policy has combined with
the Lunar New Year holiday to weigh on China's factories in
February, even as inflation has continued to accelerate, a HSBC
survey on Monday showed.
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.
(Reporting by Francis Kan; Editing by Simon Webb)
