* Middle East tension support prices
* Brent fell as much as 1 pct to below $110 on Japan
* Concern rises about impact of Japan crisis on growth
-analyst
* Coming Up: U.S. consumer prices, industrial output for
Feb.
(Recasts with steady prices)
By Alejandro Barbajosa
SINGAPORE, March 17 - Brent crude reversed losses, heading
back towards $111 after losing 1 percent earlier on Thursday, as
investors weighed Middle East tensions against risks to demand
from the nuclear crisis in quake-hit Japan.
Brent crude for May , the front-month contract after
April's expiry on Wednesday, was up 15 cents at $110.75 a barrel
at 0515 GMT, after falling as much as $1.15 to $109.45. Prices
have slid more than 4 percent since Japan's earthquake and
tsunami struck six days ago, touching a three-week low of
$107.35 on Wednesday.
U.S. crude for April gained 36 cents to $98.34.
Political unrest from North Africa to the Persian Gulf has
roiled markets for weeks, driving Brent to almost $120. But
worries about Japan, the world's third largest crude importer,
since Friday's earthquake have taken pressure off prices.
"Anything that causes unrest in Saudi Arabia or causes a
supply side event in the Middle East will cause a sharp rebound
in prices," National Australia Bank commodity economist Ben
Westmore said.
But Japan continues to weigh on the market.
"There is so much uncertainty in Japan and its ability to
drive economic recovery that it's something that is casting a
shadow on the outlook for global growth," said Westmore.
"While that shadow lasts, it's going to be difficult for oil
prices to go higher. With risk aversion some money has come out
of the oil market, and there is some aversion because the demand
outlook remains so uncertain."
Bahraini forces used tanks and helicopters to drive
protesters from the streets on Wednesday clearing a camp that
had become a symbol of the Shi'ite Muslim uprising and drawing
rare criticism from their U.S. allies.
The violence that has transformed a crisis between the
island's majority Shi'ites and minority Sunnis into a regional
standoff between Sunni Gulf Arab states and non-Arab Shi'ite
power Iran.
Bahrain lies less than 100 kms from the hub of the Saudi oil
industry at Dhahran, including the world's largest oil fields,
oil terminal and processing plant. Recent demonstrations by
Saudi Shi'ites have also centred in the kingdom's Eastern
Province.
In Libya, the battle for control of rebel capital Benghazi
looked just hours away after the Libyan army told people to
leave opposition-held locations and arms storage areas, but
residents said the city was quiet.
OPEC members including Saudi Arabia have increased
production partly to compensate for the loss of as much as
two-thirds of Libyan supplies, at the same time eroding spare
capacity.
But the effect of gloomy financial markets on oil prevailed
early on Thursday. Japanese stocks slid 3 percent after a surge
in the yen to a record high stoked fears that a stronger
currency would compound the economic hit from a worsening
nuclear crisis.
Operators of the quake-crippled nuclear plant in Japan
dumped water on overheating reactors on Thursday while the
United States expressed growing alarm about leaking radiation
and urged its citizens to stay well clear of the area.
(Editing by Ed Lane)
