* Euro hits 14-month high ahead of ECB rate decision
* Libyan rebels call on NATO for more strikes
* Coming up: EIA weekly inventory report
(Updates throughout)
By Dmitry Zhdannikov
LONDON, April 6 (Reuters) - Oil prices held near a 2-1/2
year peak on Wednesday, supported by unrest in the Middle East
and North Africa and dollar weakness ahead of an expected
European Central Bank interest rate increase.
Brent crude <LCOc1> traded just below $123 a barrel at 1300
GMT and U.S. crude <CLc1> was at $108.40 a barrel -- slightly
above their Tuesday closing levels.
The ECB is expected to raise interest rates by 0.25 percent
on Thursday in the first hike since the 2008 financial crisis.
The expectations have propelled the euro to a 14-month high
while the dollar index <.DXY> was down 0.25 percent at 1330 GMT.
[]
"Central bankers will always claim that they have no
influence on oil prices but recent history has repetitively
shown that in the new world, where commodities are a global
asset, central bankers can have a greater influence on oil
prices than OPEC," said Olivier Jakob from Petromatrix.
Members of the Organization of the Petroleum Exporting
Countries members said on Wednesday at a conference in Paris
they could do little to control prices driven by speculators
betting on "worst case scenarios" and said the market had all
the oil it needed. []
The rally in the euro took place even though Moody's rating
agency cut several Portuguese banks [] and the
country paid higher costs at a T-bill auction [].
Analysts said a return of risk appetite amid expectations of
strong recovery in the United States had outweighed yet another
increase in China's interest rates on Tuesday, the fourth since
October, to tame inflation.
"China is supposed to be leading the commodity complex but
an increase of Chinese rates is no longer a trading input for
more than a few minutes," said Jakob.
A Reuters poll showed on Wednesday China was expected to
raise rates only once more this year as it is heading for a
pause in its cycle of monetary tightening. []
Singapore-based Serene Lim of ANZ said the impact from the
hike would be mitigated by the turmoil in Libya.
"It is a stalemate in Libya and this will give support to
oil prices, which are trading at a very tight range," she said.
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ECB in graphics http://r.reuters.com/kah88r
For latest U.S. oil inventory data see: [] []
FACTBOX on Libya's oil production: []
More on Middle East unrest: []
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In Libya, the head of the rebel army said NATO had been too
slow to order air strikes to protect civilians. []
In Bahrain, firms have fired hundreds of mostly Shi'ite
Muslim workers who went on strike to support pro-democracy
protesters, an opposition group said on Tuesday, in what
appeared to be part of a government crackdown. []
A forecast for a rise in U.S. oil stockpiles due out on
Wednesday could dampen sentiment for U.S. crude. []
"It is hardly surprising that U.S. oil is not able to keep
up with the latest rally and is even tending a little softer,"
analysts at Commerzbank said in a note.
"This is because the tensions in North Africa are largely
behind the rise in prices while the supply situation in the U.S.
essentially remains relaxed."
Technical analysis showed Brent could rise above $126, said
Reuters analyst Wang Tao. []
Brent's rally to above $120 a barrel could soon fizzle out,
according to a majority of traders and analysts in a Reuters
poll released on Wednesday. But they expected Brent to roar back
above $130 in the second half of this year. []
(Reporting by Dmitry Zhdannikov; editing by Anthony Barker)
