* Brent premium to U.S. crude drops below $10/bbl
* Libya turmoil, worries about region still supportive
* Coming up: API oil inventory data Tuesday
(Recasts, updates with settlement prices and market activity)
By Robert Gibbons
NEW YORK, March 7 (Reuters) - Brent crude prices reversed
after jumping back above $118 a barrel on Monday, and U.S. oil
pared gains after concerns about Libya's conflict and the
threat of wider supply disruptions in the Middle East lifted it
to the highest level since September 2008.
Profit taking in the trade on the spread between Brent and
its U.S. counterpart was cited by traders and brokers. The
spread <CL-LCO1=R> was reduced more than $1 to under $10 a
barrel, after rising above $17 a barrel last week.
"The WTI-Brent spread is starting to unwind, but the Libya
fighting and concerns about Saudi Arabia and the region
remain," said Richard Ilczyszyn senior market strategist at
Lind-Waldock in Chicago.
Britain and France said they were seeking U.N. authority
for a no-fly zone over Libya, as Muammar Gaddafi's warplanes
counter-attacked rebels and aid officials said a million people
were in need. []
Trading was volatile, with investors reacting both to
attacks by Gaddafi supporters to retake an oil hub from rebels
and then to rumors that Gaddafi was seeking a deal with rebels
to secure a safe exit from the country.
Brent crude futures for April delivery <LCOc1> fell 93
cents to settle at $115.04 a barrel, pulling back from an
earlier $118.50 peak.
U.S. crude futures for April delivery <CLc1> rose $1.02 to
settle at $105.44, the highest close since September 2008.
The $106.95 intraday peak was U.S. crude's highest price
since Sept. 26, 2008, when front-month crude reached $108.11.
Brent's premium to its U.S. counterpart <CL-LCO1=R> fell
$1.68 cents to $9.64 at 4:01 p.m. EST (2101 GMT), having
narrowed from a record above $17 hit March 1, according to
Reuters data.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Reuters Insider: John Kozey says crude set for pullback
http://link.reuters.com/dud48r
FACTBOX on emergency oil stockpiles: []
Graphics on U.S. strategic oil reserve, U.S. and other IEA
nations reserves: http://link.reuters.com/cah48r
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
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
LIBYAN FIGHTING
Government forces seeking to dislodge rebels from Libya's
strategically important coast struck at the Ras Lanuf oil
town.
OPEC-member Libya usually produces about 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.
A leading member of Libya's ruling establishment appealed
to rebel leaders for dialogue in the clearest sign yet Gaddafi
may be ready to compromise with opponents challenging his rule.
[]
The offer was dismissed by rebel leaders.
With Libya still in turmoil, Saudi Arabia's security forces
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. []
(Additional reporting by Alex Lawler and Karolin Schaps in
London and Alejandro Barbajosa in Singapore; Editing by Walter
Bagley)
