* Brent hits highest since September 2008
* Mideast tension overshadows rise in U.S. inventories
* Coming Up: Euro-zone ECB rate decision; 1245 GMT
(Adds Shell CEO comment, updates prices)
By Alex Lawler
LONDON, Feb 3 (Reuters) - Brent crude rose above $103 a
barrel on Thursday after violent clashes in Egypt raised concern
of supply disruptions and unrest across the Middle East,
overshadowing ample supplies in top consumer the United States.
The crisis in Egypt has raised the prospect of disruption to
supply of Middle East oil shipped through Egypt and of unrest
spreading across the Middle East and North Africa, which
combined produce more than a third of the world's oil supplies.
Brent crude for March <LCOc1> rose as much as $1.03 to
$103.37 a barrel, the highest intraday price since Sept. 26,
2008, and was up 56 cents at $102.90 at 1119 GMT. U.S. crude for
March <CLc1> rose $1.03 to $91.89.
"Everybody is watching Egypt, we are looking at Yemen too,"
said Christophe Barret, oil analyst at Credit Agricole in
London. "Mainly, it's fear of contagion to other countries.
"I think prices above $100 for Brent are just not
sustainable, it's something that has a very strong impact on the
economy, a strong impact on demand."
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For all stories on the Egypt crisis, click:[]
For a graphic on Brent's growing premium over WTI:
http://r.reuters.com/guz77r
For a 4-week technical outlook for Brent: []
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On Thursday, supporters of President Hosni Mubarak opened
fire on protesters in Cairo's Tahrir Square, killing at least
five people, in a fresh spike in violence over an unprecedented
challenge to his 30-year-old rule. []
In Yemen, more than 20,000 people filled the streets of
Sanaa on Thursday for a "Day of Rage" rally, demanding a change
in government and saying President Ali Abdullah Saleh's offer to
step down in 2013 was not enough. []
SUPPLY CUSHION
Oil's rally has put pressure on the Organization of the
Petroleum Exporting Countries to increase output.
OPEC has maintained supply is adequate and said it has no
plan to meet before its next scheduled gathering in June.
Royal Dutch Shell <RDSa.L> Chief Executive Peter Voser said
that OPEC's idle production capacity of 5 million barrels per
day (bpd) -- more than the 2 million bpd it held in 2008 when
oil spiked to a record $147 a barrel -- could help prevent a
surge in prices this year.
"In the absence of geopolitical factors, this may well
cushion the markets from a spike in 2011," Voser said at a news
conference to discuss Shell's results.
So far, the crisis has not affected traffic on the Suez
Canal or flows on the Suez-Mediterranean (SUMED) oil pipeline.
Egypt controls both routes, which together moved over 2 million
bpd of crude and oil products in 2009.
Ben Westmore, commodities economist at National Australia
Bank, said that plentiful oil supply could weigh on prices when
concern over Egypt eases.
"Once the tensions there begin to moderate, then you will
have the market focusing again on fundamentals. We still have
this abundant supply, so there is definitely more downside than
upside," he said.
U.S. crude inventories rose last week, a government report
showed on Wednesday. Stocks at Cushing, Oklahoma, the delivery
point for U.S. futures, hit a record, keeping the pressure on
the U.S. marker relative to Brent. []
In other markets, European shares were lower as traders
awaited details of the European Central Bank's meeting and its
plans to fight inflation, while Shell's share prices fell after
earnings lagged expectations.
Copper, a key industrial metal, hit a record high on
Thursday on expectations of strong global demand, while the
dollar was little changed against a basket of currencies.
(Additional reporting by Barbara Lewis in London and Alejandro
Barbajosa; editing by James Jukwey)
