* Kuwait protests smaller than expected
* Sanctions against Libya begin to bite
* Coming Up: U.S. EIA weekly inventory report at 1530 GMT
(Updates prices, quotes, previous SINGAPORE)
By Claire Milhench
LONDON, March 9 (Reuters) - Oil rose on Wednesday after two
days of losses to trade over $113 a barrel, as worries about
Middle East unrest outweighed reassurances from OPEC of ample
spare capacity.
Brent crude oil futures for April <LCOc1> were up 46 cents
to $113.52 a barrel at 0858 GMT, but still well off two and a
half year highs reached on Feb. 24.
U.S. crude <CLc1> was down 33 cents at $104.69 as high
inventories at key delivery point Cushing, Oklahoma weighed on
prices.
Discussion among OPEC ministers about a possible output rise
remained a focus for the market, said Christophe Barret, global
oil analyst at Credit Agricole Corporate and Investment Bank.
[]
"But there are fierce battles in Libya, and with the U.N.
sanctions it looks likely there will be hardly any oil exported
from Libya as long as this conflict lasts," he added.
Libyan tanks and warplanes intensified their offensive
against rebels on Tuesday aiming to recover lost territory,
while world powers considered a no-fly zone over the country.
[] []
The Pentagon said that the United States was still looking
at a range of military options on Libya []. Libyan
oil trade has been virtually paralysed as banks decline to clear
payments in dollars due to U.S. sanctions [].
The oil price had retreated on Tuesday after Kuwait's oil
minister said that the Organization of the Petroleum Exporting
Countries is in talks about officially boosting crude supplies.
In addition, leading oil producer Saudi Arabia is pumping
more oil -- up to 9 million barrels per day (bpd).
[]
"That's a lot of oil," said Thorbjorn Bak Jensen, oil market
analyst at Global Risk Management. "That put a dampener on
prices."
At 9 million bpd Saudi Arabia is exceeding its OPEC quota by
almost 1 million bpd, roughly the same as the lost Libyan
output.
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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
Those 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
Graphic of U.S. oil stocks: http://r.reuters.com/sup48r
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SAUDI SUPPLY
OPEC top producer Saudi Arabia said on Tuesday it had ample
spare capacity to boost supplies to the market if needed.
"The kingdom has 3.5 million bpd of spare capacity which
could help compensate for any shortages," oil minister Ali
al-Naimi said in remarks carried by Saudi state news agency SPA.
Oil markets have been watching to see if there is any danger
of serious disruption in Saudi Arabia, with a "Day of Rage"
planned for Friday. []
But protests in Kuwait on Tuesday evening were smaller than
expected, with only several hundred people demonstrating for a
change of the Gulf state's prime minister and more political
freedoms. []
"People are cutting the risk premium of the contagion risk,"
said Bak Jensen. "We have seen protests in Kuwait but it was not
a million people. A lot of the price increase was on the back of
the expectation that the Saudi protest will be huge -- but maybe
that will not be the issue."
U.S. crude inventories climbed a larger-than-expected 3.8
million barrels in the week to March 4, the American Petroleum
Institute (API) said on Tuesday, ahead of EIA statistics due on
Wednesday at 1530 GMT.
(Additional reporting by Alejandro Barbajosa)
