UPDATE 7-Brent rebounds on Middle East crisis, Japan eyed

                                
 * Brent rebounds from 3-wk low to touch $111.09 a barrel
                                
 * Violent clashes in Bahrain, Yemen, Syria
                                
 * Japan crisis solutions seen as last-ditch efforts
                                
 * API crude stocks up less than expected, EIA at 1430 GMT
                                
 
                                
 (Updates lead, adds quote, updates prices)
                                
 By Jessica Donati
                                
 LONDON, March 16 (Reuters) - Oil prices rose by over $2 on
Wednesday, with Brent topping $111 a barrel and rebounding from
3-week lows a day earlier as escalating violence in the Middle
East renewed fears about oil supply in the region.
                                
 After an earlier crackdown on protesters in Bahrain resulted
in at least four deaths according to hospital sources, violent
clashes erupted in Yemen and Syria. [ID:nLDE72F0ZN]
[ID:nLDE72F12M]
                                
 Iran chimed in with President Mahmoud Ahmadinejad quoted by
state television condemning Bahrain's crackdown on mainly
Shi'ite protesters as unjustifiable. [ID:nLDE72F1AZ]
                                
 "Saudi is not happy about what is going on in Bahrain... The
situation in Bahrain is potentially destabilising for Saudi
Arabia," said David Morrison, a strategist at GFT.
                                
 Brent for April <LCOc1> was up $1.61 at $110.13 a barrel by
1320 GMT, rebounding from its sharpest tumble in 13 months on
Tuesday to a near three-week low of $107.35. 
                                
 U.S. crude futures were up $1.17 at $98.35 a barrel around
the same time.
                                
 Saudi intervention in Bahrain has been taken as a mark of
concern that Bahraini protests could inspire Saudi Arabia's own
Shi'ite minority. [ID:nLDE72F02J]
                                
 The island state lies less than 100 kilometres from the hub
of the Saudi oil industry around Dhahran, including the world's
largest oil fields, terminals and processing facilities
                                
 Saudi protests have mostly taken place in the Eastern
Province, where the oil industry is based and which is home to
most of the Shi'ites that make up around 15 percent of the
population in the kingdom. [ID:nLDE72E07A]
                                
 Muammar Gaddafi's advance in Libya [ID:nLDE72F00F] added to
uncertainty on Wednesday, as traders speculated whether the West
would take measures resulting in prolonged loss of Libyan oil
supplies.
                                
 "The question is, if the government is regaining power what
should the West do - that is putting some geopolitical risk back
in," said Rob Montefusco, an oil trader at Sucden Financial.
                                
 
                                
 JAPAN EYED
                                
 Oil prices have yet to benefit from an expected increase in
Japanese demand for gasoil and fuel oil for power generation to
replace some of the nuclear capacity lost following Friday's
earthquake and tsunami. [ID:nL3E7EF450]
                                
 Reconstruction efforts and the increased need for
non-nuclear fuel is forecast to boost Japanese oil burning by
around 500,000 barrels per day, a report published by the JBC
Energy Research Centre showed.
                                
 But oil shipments to Japan so far have not been
significantly affected, a top shipping industry group said on
Wednesday. [ID:nL3E7EG0F3]
                                
 "It remains unclear whether the earthquake in Japan will
ultimately result in an increase or decrease in oil demand,"
said Christopher Bellew, an oil trader at Bache Commodities in
London.
  <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
  SNAP ANALYSIS-Japan nuclear crisis         [ID:nL3E7EF03A]
  Economists' estimate of Japan quake impact [ID:nTOE72E01C]
  Charting Japan nuclear crisis: http://r.reuters.com/sec58r
  Global nuclear incident map:   http://r.reuters.com/wym58r
  Picture, graphic packages:     http://r.reuters.com/wyb58r
  Refinery, utilities and smelter shutdowns  [ID:nL3E7EE1HQ]
  Insider video:                 http://r.reuters.com/mym58r
  LIVE:   http://live.reuters.com/uk/Event/Japan_earthquake2
  Winds in Japan on Tuesday   http://link.reuters.com/bym58r
  ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
                                
 US STOCKBUILD SLOWS
                                
 U.S. crude oil futures were supported by a
smaller-than-expected 91,000 barrel stockbuild at the Cushing
storage hub, data released by the American Petroleum Institute
(API) showed late on Tuesday. [API/S]
                                
 Analysts polled by Reuters had on average expected a
1.8-million-barrel build. [ID:nN15277086]
                                
 "The weekly API oil inventories report was fairly bullish
after showing a small build in crude oil stocks and a strong
rebound in the U.S. refinery utilisation," according to a report
by Sucden Financial Research.
                                
 A U.S. Energy Information Administration report due at 1430
GMT on Wednesday is forecast to show higher crude inventories on
increased imports, while gasoline stocks are expected to fall
1.8 million barrels. 
                                
 Distillate supplies, which include heating oil and diesel,
are expected to have dropped 1.3 million barrels according to
the poll. [ID:nN15287595]
                                
 
                                
(Additional reporting by Alejandro Barbajosa; editing by
Jason Neely and Jane Baird)