* Uncertainty surrounds Libyan truce declaration
* Yemen president declares state of emergency
* Coming up: CFTC positions data, 3:30 p.m. EDT Friday
(Recasts, updates prices, adds details)
By Robert Gibbons
NEW YORK, March 18 (Reuters) - Oil prices fell on Friday in volatile
trading after Libya's government declared a cease-fire as Western planes
prepared to attack in the wake of a UN resolution authorizing a no-fly
zone.
Both Brent and U.S. crude futures pulled back several dollars from
peaks, but uncertainty about the stability of any cease-fire limited
initial price drops amid reports that Gaddafi's forces continued to fire at
rebel-held towns. [] []
Oil prices were buffeted earlier, with prices slumping briefly, after
China's central bank said it would raise lenders' required reserves,
another move to rein in inflation that could dampen oil demand.
[]
Brent crude futures for May delivery <LCOc1> fell $1.30 to $113.60 a
barrel by 2:06 p.m. EDT (1628 GMT), off an earlier $117.29 peak.
U.S. crude futures for April delivery <CLc1> fell 70 cents to $100.72 a
barrel, off its high of $103.66, but finding support just above the
$100-a-barrel level.
Total U.S. and Brent crude trading volumes were at 520,512 and 460,089
lots, respectively, after prices jumped nearly 4 percent on Thursday in
some of the year's lightest volumes as the market weighed the potential
impact of Libya's conflict, Middle East tensions and Japan's nuclear
crisis.
"This does not mean we are near a resolution of the situation in Libya.
We may be facing the possibility of an entrenched status quo between pro
and anti Gaddafi groups," said Harry Tchilinguirian, analyst at BNP
Paribas.
"This only maintains the uncertainty in terms of when we will
eventually have a full resumption of production in Libya."
Libyan authorities must comply with all elements of the United Nations
resolution on the end of hostilities, UN Secretary-General Ban Ki-moon said
at a news conference in Madrid. []
France said it remained cautious as the threat on the ground in Libya
had not been lifted and Britain said Gaddafi would be judged by his actions
rather than his words. [] []
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Libya no-fly zone graphics http://link.reuters.com/wub68r
More on Middle East unrest: [] []
Western forces in region http://link.reuters.com/jen38r
Latest graphic: http://r.reuters.com/nym77r
Interactive factbox http://link.reuters.com/puk87r
Graphic on air bases http://link.reuters.com/zyk48r
Graphic on missile defences http://link.reuters.com/wem48r
Graphic on no-fly zone http://link.reuters.com/wub68r
Breakingviews-Crude bullied by black swans []
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VOLATILE MIDDLE EAST
While Libya's conflict pushed markets around, unrest in the Middle East
also provided uncertainty.
Yemen's president declared a state of emergency after at least 25
protesters were killed at an anti-government rally. []
A crackdown by authorities in Bahrain against Shi'ite protesters
demanding the reform from the Sunni monarchy, drew criticism from the
United States and Iran.
Sunni-ruled Saudi Arabia, OPEC's top oil exporter, sent troops into
Bahrain earlier this week along with other forces from the Gulf Cooperation
Council (GCC).
Eyeing the region's growing unrest, Saudi Arabia's King Abdullah
announced on Friday $93 billion in handouts and boosted its security
apparatus. []
A violent crackdown on demonstrators also came in Syria on Friday.
[]
JAPAN'S NUCLEAR CRISIS
Japan's earthquake and tsunami a week ago, and the resulting nuclear
reactor crisis, caused oil prices to ease some after unrest in the Middle
East and North Africa drove oil prices to a 2-1/2-year highs, with Brent
nearing $120 last month.
Risk-averse sentiment increased as Japan struggled to prevent
catastrophic radiation releases from its quake-damaged nuclear reactors,
even as oil investors tried to assess the short- and longer-term impact the
disasters will have on oil demand and economic activity.
(Additional reporting by Gene Ramos in New York, Nia Williams in London
and Alejandro Barbajosa in Singapore; Editing by John Picinich)
