* Portuguese PM's resignation reignites bailout fears
* U.S. crude boosted by inventories, momentum trades
* Coming up: EU summit in Brussels; US weekly jobless data
(Updates prices, adds new quotes)
By Claire Milhench
LONDON, March 24 (Reuters) - Brent crude see-sawed on
Thursday, as concerns about instability in the Middle East were
offset by worries about the economic health of the eurozone
following the resignation of Portugal's prime minister.
At 1110 GMT, May Brent <LCOc1> was down 18 cents to $115.37
a barrel after earlier trading up on the day to $115.92.
"Today we have a sideways move, a little bit up, a little
bit down, because of the Portuguese prime minister's resignation
yesterday," said Thorbjorn Bak Jensen, an oil market analyst at
Global Risk Management.
U.S. crude <CLc1> was up 62 cents to $106.37, supported by a
steep decline in U.S. gasoline stockpiles for the week to March
18. The fall and drove U.S. crude to its highest settlement
since 2008 on Wednesday. []
"Technical factors are also supporting U.S. crude, analysts
said. "Now that it has broken above the $104 level, we will see
a little bit more momentum kicking in, trying to take it through
the $106 level," said Michael Hewson, an analyst at CMC Markets.
Brent on the other hand has little fresh momentum to take it
higher, he said. Instead, the market is torn between problems in
the euro zone and the ongoing conflict in the Middle East.
"We have a tug of war between positive and negative factors
for oil prices," said Carsten Fritsch, an oil analyst at
Commerzbank.
"The bullish factors are still in place: the war in Libya,
unrest in other parts of the Arab world, a greater need for
fossil fuels in Japan, and pretty bullish inventory data
yesterday are all supportive of higher oil prices."
Fritsch said that despite the resignation of Portugal's
Prime Minister Jose Socrates, which had weighed on oil
overnight, oil prices could probably rise further.
"The developments in Libya and the Middle East are still the
most important factor to watch," he said.
Socrates resigned on Wednesday after the Portuguese
parliament rejected his government's latest austerity measures,
which were designed to avoid a bailout. []
Eurozone leaders will meet in Brussels later today for a
two-day summit to try to address the sovereign debt problems
which have dogged the region. []
Portugal has to meet a bond redemption of over 4 billion
euros in mid-April but according to its constitution it does not
have time to hold a general election before then.
"The resignation of the Portuguese prime minister is
creating some risk on/risk off (trading), depending on which way
the wind is blowing," Bak Jensen said.
"We have had some positive numbers this morning for German
manufacturing and service PMI [], but we still have
this Portugal ghost hanging over us. What are they going to do?"
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic - record March U.S. gasoline drawdowns:
http://r.reuters.com/fys68r
More on Middle East unrest: [][]
Libya graphics http://link.reuters.com/neg68r
Oil technicals []
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MIDDLE EAST TENSIONS
Western warplanes hit Libya for a fifth night. The
U.N.-backed assault has so far failed to stop Muammar Gaddafi's
tanks shelling rebel-held towns or dislodge his tanks from
Misrata port [] [].
Syrian forces killed six people in an attack on protesters
in a mosque complex in the southern city of Deraa, and later
opened fire on hundreds of youths marching in solidarity,
witnesses said. [] []
Meanwhile in Yemen, presidential guards loyal to President
Ali Abdullah Saleh clashed in the town of Mukalla with army
units backing opposition groups and protesters demanding his
removal. []
Markets are being bid up "more by negative psychology about
the goings-on in the Middle East", than a compelling case from
supply/demand fundamentals," Edward Meir, a senior commodity
analyst at brokers MF Global, said in a note.
"Short-term, we suspect the advance is getting somewhat
over-extended... Having said that, any sell-off from here would
likely be short-lived, as there are enough nervous investors out
there to still be buying the dips."
(Additional reporting by Alejandro Barbajosa; editing by Keiron
Henderson)
