* Almost half of Libya oil output cut- Libya NOC chairman
* U.S. crude stockpiles likely rose for 7th straight week
* World Bank says strong oil prices will not derail recovery
* Dollar hits lows ahead of Fed Reserve's Bernanke testimony
(Updates throughout)
By Zaida Espana
LONDON, March 1 (Reuters) - Brent crude oil futures rose
above $112 a barrel on Tuesday as concern about potential supply
disruptions amid protests in the Middle East and North Africa
lent support, even as Saudi Arabia ramped up output.
Brent futures for April <LCOc1> were up 85 cents at $112.65
a barrel by 1236 GMT, paring gains after climbing by a dollar
earlier in the session.
The contract gained over 10 percent in February, its biggest
monthly percentage rise since May 2009. U.S. crude futures
<CLc1> were up 87 cents at $97.84 a barrel, after rising by a
dollar earlier in the session.
Both benchmarks surged to their highest in 2-1/2 years last
week as a revolt in Libya cut supply and spurred fears that
tensions could spread to other oil producers in the region.
More governments issued calls for Libyan leader Muammar
Gadaffi to quit, while he deployed forces to a western border
area on Tuesday. [] []
Libya's National Oil Corporation chairman, Shokri Ghanem,
said its oil installations were undamaged, although output
halved as a result of the departure of oil workers.
[]
Worries about the unrest in the region led Saudi Arabia's
benchmark stock index <.TASI> to plunge to 20-month lows as
panic selling sent shares tumbling.
Saudi Arabia sought to calm the market by pledging to pump
more, while Iraq announced an increase in average oil exports in
February and preliminary data showed Nigerian crude oil exports
will rise sharply in April. [] []
[]
"Saudi Arabia has compensated for supply losses in Libya,
which has prevented a further price rise so far. The biggest
OPEC producer is likely to be already producing more than 9
million barrels of crude oil a day at present," Commerzbank
analysts said in a note.
"Saudi Arabia's spare capacities are thus another good 3
million barrels a day. The market is likely to get nervous, at
the latest, when spare capacities drop below 2 million barrels a
day."
In Oman, a small oil producer, the army fired in the air,
wounding one person, as it moved to disperse protesters near the
northern port of Sohar. []
Some analysts noted that the Saudi move to increase supplies
could be mirrored by other oil producers keen to benefit from
the current strength in prices, which could temper further price
gains.
"The Saudi unilateral decision to increase supplies also
implies that the OPEC quotas are de facto written off, and
Kuwait has already started giving signs that it will likely
follow the steps of Saudi Arabia," Petromatrix's Olivier Jakob
said.
"At current prices it makes sense for both Kuwait and the
UAE to also increase supplies rather than stay idle and watch
Saudi Arabia increase its market share."
Investors awaited the latest U.S. weekly crude inventories
data from industry group American Petroleum Institute at 1630
GMT. Economists polled by Reuters expect an increase in
stockpiles for a seventh consecutive week on higher imports.
[]
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Middle East unrest graphics http://r.reuters.com/nym77r
Who is in control in Libya http://r.reuters.com/jem28r
Map of control in Libya http://r.reuters.com/fug38r
Countries most reliant on oil http://r.reuters.com/dux28r
Calculator: Oil price impact on GDP
http://r.reuters.com/jux28r
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OIL SPIKES COULD HIT GROWTH
The dollar hit its lowest in three and a half months versus
a currency basket on Tuesday on the view U.S. monetary policy
will remain loose, as the market awaited testimony by Federal
Reserve Chairman Ben Bernanke. []
Bernanke is likely to remain sceptical about the strength of
the economic recovery in testimony on Tuesday, despite recent
data pointing to improvement, signalling the central bank is
unlikely to cut short its $600 billion stimulus plan.
[]
A sustained period of higher oil prices would significantly
affect developing economies but is unlikely to derail their
strong recovery since the financial crisis, a senior World Bank
official said on Monday. [] []
The European Commission expects oil prices to average around
$100 a barrel this year, EU economic and monetary affairs
commissioner Olli Rehn said on Tuesday. []
In China, manufacturing growth slowed in February to a
six-month low, according to an official survey, as the
government's sustained campaign to tame inflation weighed on
industrial activity.
China is targeting 7 percent per year annual economic growth
from 2011-2015, down from the average growth of 11.2 percent in
the last five year period. []
(Additional reporting by Florence Tan in Singapore; editing by
Jane Baird)
