* Brent crude rises 0.3 percent, tops $116
* Disruption of Libyan crude exports to be prolonged
-Barclays
* Brent's premium to WTI rebounds as Cushing stocks reach
record
* Coming Up: U.S. initial jobless claims; 1330 GMT
(Adds background on China inflation, oil imports, Iran
sanctions)
By Alejandro Barbajosa
SINGAPORE, March 10 (Reuters) - Brent crude rose 0.3 percent
to surpass $116 on Thursday after forces loyal to Libyan leader
Muammar Gaddafi bombed oil industry infrastructure, inflicting
what could be longer-term damage on the country's exporting
capacity.
Gaddafi's forces struck an oil pipeline leading to Es Sider
and dropped bombs on storage tanks in the Ras Lanuf oil terminal
area in the eastern section of Libya that is rebel-controlled.
Rebels said government forces also hit an oil pipeline leading
to Sidrah.
"The large explosions and enormous columns of smoke from
storage tanks and other facilities in Ras Lanuf, close to the Es
Sider terminal, are perhaps more than merely symbolic," Barclays
Capital oil analysts headed by Paul Horsnell said.
"They represent a final fading of any residual realistic
hope that the outage of Libyan oil could prove to be anything
other than prolonged."
Brent crude for April gained 34 cents to $116.28 a
barrel at 0331 GMT after soaring almost $3 on Wednesday, or 2.5
percent, from as low as $112.16. They reached a 2-1/2-year high
of $119.79 on Feb. 24.
U.S. crude gained 27 cents to $104.65, after touching
a 2-1/2-year peak of almost $107 earlier this week.
On Wednesday, U.S. crude fell after stockpiles at the
pricing point for benchmark West Texas Intermediate at Cushing,
Oklahoma, surged 1.7 million barrels to a record of almost 40.3
million barrels, according to the U.S. Energy Information
Administration.
That caused the discount of WTI to European marker Brent to
widen to almost $12 a barrel from about $8 the previous day.
Total U.S. crude inventories rose 2.5 million
barrels last week, the EIA said, dwarfing the forecast for an
increase of just 400,000 barrels in a Reuters poll. The weekly
inventory data also showed drawdowns for gasoline and
distillates were bigger than expected, reflecting improving
demand.
Confirming previous non-Libyan estimates, Shokri Ghanem,
chairman of Libya's National Oil Corp, said that production has
been cut to about half a million barrels per day from 1.6
million bpd by the war, as many foreign and local workers have
left oil fields.
Libyan oil trade has been paralyzed as banks decline to
clear payments in dollars due to U.S. sanctions, though Austrian
energy group OMV said it had been buying small amounts of Libyan
crude oil and would continue to do so.
"It appears that most of Libya's bridges with OECD countries
in particular are already aflame or may have already been
burned," Barclays Capital said.
"One can now easily imagine circumstances in which Libya's
previously very short-haul exports of crude oil become very
long-haul indeed."
A Libyan insurgent said rebels had retaken the heart of the
closest city to the capital from forces loyal to Gaddafi on
Wednesday evening in some of the fiercest fighting in almost
three weeks of clashes.
Saudi Arabia has increased production to 9 million bpd,
almost 1 million bpd above its current OPEC target. The kingdom
says it currently holds spare capacity of 3.5 mln bpd.
Still, an OPEC delegate said on Wednesday that the group saw
no need for an emergency meeting to discuss raising output.
Saudi Shi'ites staged another small protest in the kingdom's
Eastern province, defying a ban on demonstrations, but Foreign
Minister Prince Saud al-Faisal said dialogue, not protest, was
the best way to bring about change.
Saudi Arabia's ruling family has mobilised the power of its
conservative religious establishment to prevent a wave of
uprisings against Arab autocrats from roaring into its kingdom,
home to more than a fifth of the world's known oil reserves.
The U.S. believes new sanctions should be put on Iran and
existing ones more tightly enforced after talks on reining in
Tehran's nuclear program failed in January, a U.S. official said
on Wednesday.
China is confident that it can hold inflation to an average
of 4 percent this year, the government's statistics chief said
on Thursday, but a central bank adviser warned that soaring
commodity costs were adding to upside risks.
The country reported crude oil imports of 19.95 million
tonnes of crude oil or 5.2 million barrels per day in February,
compared with 21.80 million tonnes in January.
(Reporting by Alejandro Barbajosa; Editing by Ed Lane)
