* U.S. jobless claims, factory data help lift prices
* Japan in desperate bid to avert nuclear catastrophe
* Libyan army marching towards rebel-held Benghazi
* Saudi Shi'ites protest in support of Bahrain activists
(Recasts, updates prices, market activity, adds new by-line,
changes dateline, previously LONDON)
By Gene Ramos
NEW YORK, March 17 (Reuters) - Oil prices rose nearly 3
percent on Thursday as unrest in the Middle East and North
Africa added more worries about supply disruptions even as
investors weighed impact on demand of Japan's earthquake
disaster.
Bahrain's ongoing crackdown on Shi'ite protesters after
Saudi Arabia sent in troops on Monday has provoked a complaint
from Iran lodged before the United Nations, sparking worries of
a wider regional unrest that could stifle oil production.
At the same time, analysts said damage to Libya's oil
infrastructures in the wake of a rebellion may require a long
period of repairs before it can recover production currently
down about two-thirds of its normal 1.6 million barrel per day
output.
In Japan, the government mounted a desperate bid to avert a
catastrophe at a crippled nuclear complex, on the sixth day
after a disastrous earthquake and tsunami struck its northern
region, severely affecting demand in the world's third largest
oil consumer.
"With the Japanese crisis we are starting to enter an area
of systemic risk where assets can see extreme fluctuations
without necessarily a fundamental justification," Olivier
Jakob, oil analyst at Petromatrix, said in a note.
By 11:35 a.m. EDT (1535 GMT), Brent crude for May delivery
<LCOc1> rose $3.04 to $113.64 a barrel, after hitting a session
high of $114.20.
U.S. crude for April delivery <CLJ1> gained $2.45 to
$100.43, after rallying to an early high of $100.78.
U.S. crude's sharp rise was also aided by upbeat data on
jobless benefit claims and factory activity in the Mid-Atlantic
region. Data showing that inflation remained contained despite
rising prices also helped boost investor mood. []
MIDEAST TENSIONS UNABATED
The state-owned Bahrain Petroleum Co (BAPCO) has partly
shut down production due to staff shortages caused by political
unrest in Bahrain, trade sources said. []
Bahrain arrested at least six opposition leaders, a day
after its crackdown on protests among the Shi'ite Muslim
majority drew rare U.S. criticism and raised fears of a
regional conflict. []
Libyan troops pushed forward towards the insurgent
stronghold of Benghazi and launched air raids on its outskirts
as Washington raised the possibility of air strikes to stop
Muammar Gaddafi's forces. []
Saudi Shi'ites marched in the kingdom's oil-producing east
on Wednesday, demanding the release of prisoners and voicing
support for Shi'ites in nearby Bahrain, an activist and
witnesses said. []
"The focus is back on continuing unrest in the Middle East
and what will be a lot of disruption in Libya for a long time,"
said Christopher Bellew, an oil trader at Bache Commodities.
"The risk is more to the upside -- there was a lot of long
liquidation on that sharp sell off at the beginning of the week
so we will work our way a bit higher probably."
(Additional reporting by Robert Gibbons in New York; Claire
Milhench in London; Alejandro Barbajosa in Singapore; Editing
by Marguerita Choy)
