* Spread of unrest in Mideast, supply worry, supports oil
* Air attacks on Gaddafi forces in Libya keep oil lifted
* Coming up: API oil inventory data on Tuesday
(Recasts, updates with U.S. settlement price, additional
detail)
By Robert Gibbons
NEW YORK, March 21 (Reuters) - Oil prices rose 1 percent on
Monday as spreading unrest in the Middle East intensified
concerns about potential threats to the region's oil supply and
U.N.-mandated air strikes kept flow reduced from OPEC-member
Libya.
Failure of both Brent and U.S. crude prices to reach
Friday's intraday highs, the approaching expiration Tuesday of
the U.S. April crude contract and lingering concern about oil
demand in Japan as it deals with its post-earthquake nuclear
reactor crisis helped pull oil down from its early peak.
Total crude trading volumes remained well below average,
continuing last week's trend and underscoring the uncertainty
facing the market and diminished open interest, brokers and
analysts said.
Brent crude futures for May delivery <LCOc1> rose $1.03, or
0.9 percent, to settle at $114.96 a barrel, off its intraday
peak of $116.22.
U.S. crude futures for April delivery <CLc1> rose $1.26, or
1.25 percent, to settle at $102.33 a barrel, off its high of
$103.35. The April contract expires on Tuesday.
Brokers noted that both front-month Brent and U.S. crude
met resistance ahead of their respective Friday intraday peaks
of $117.29 and $103.66, hit before the "cease-fire" declaration
by Gaddafi's government in Libya pulled prices from their
intraday highs.
"The key is really how Saudi (Arabia) and Iran play out.
Cool heads need to prevail. It's contained at the moment, but
if things worsen, you see a Mideast premium very quickly," said
Jonathan Barratt, managing director of Commodity Broking
Services.
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More on Middle East unrest: [] []
US military leads on Libya but for how long?[]
Libya graphics http://link.reuters.com/neg68r
Map of Benghazi http://link.reuters.com/gyv58r
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MIDDLE EAST UNREST AND SAUDI ARABIA
Unrest flared again in the Middle East over the weekend,
spreading to authoritarian Syria. In Saudi Arabia's neighbor
Yemen top generals, ambassadors and some tribes threw their
support behind anti-government protesters in a major blow to
President Ali Abdullah Saleh's efforts to ride out demands for
his exit. [] []
Tension also increased between Bahrain and Iran as
tit-for-tat diplomatic expulsions followed Tehran's anger at
last week's crackdown on Shi'ites. Bahrain's king on Monday
announced a foreign plot had been foiled. []
Top-exporter Saudi Arabia has not yet experienced the kind
of mass uprisings that have rocked other parts of the Arab
world this year, but dissent has surfaced as protests took root
in nearby Yemen, Bahrain and Oman. []
LIBYAN UNCERTAINTY
Criticism of the Western air attacks on Libya came from
Russia and China, who along with India, Brazil and Germany
abstained from the U.N. Security Council vote last week
authorizing the use of force against Gaddafi.
The critiques raised the possibility of reshaped Libyan oil
deals, shutting out countries involved in the U.N.-authorized
attacks, if Gaddafi retains control of oil infrastructure.
Libya is considering offering oil block contracts directly
to China, India and other nations it sees as friends, Libya's
top oil official said on Saturday. []
Libya's oil output has fallen to less than a quarter of the
1.6 million barrels per day (bpd) produced prior to the
rebellion against the Gaddafi rule.
JAPAN'S NUCLEAR WOES
Headlines from Japan's troubled nuclear complex revived
worries about the country's economy as unexplained smoke from
two reactors kept investors uncertain. []
Anxiety also rose over mounting evidence of radiation from
the damaged nuclear plant in vegetables, water and milk, and
the Pacific Ocean nearby. []
REFINED PRODUCTS STRENGTH
U.S. gasoline <RBc1> futures posted the strongest
percentage rise on Monday, though heating oil <HOc1> futures
also rose, with gasoline benefiting from the end of the winter
heating season and hopes for better driving demand ahead.
"Gasoline is following crude and there its seasonality, as
we come out of heating oil season and approach driving demand
season," said Robert Yawger, senior vice president for energy
futures at MF Global in New York.
Also supportive to products were analyst expectations that
weekly reports on U.S. oil inventories will show stockpiles
fell last week.
A Reuters analyst survey on Monday yielded a forecast for
crude stocks to have risen 2 million barrels last week, but for
gasoline stocks to be down 1.9 million barrels and distillate
stockpiles to be down 1.5 million barrels. []
(Additional reporting by Gene Ramos in New York, Jessica
Donati in London and Alejandro Barbajosa in Singapore; editing
by Jim Marshall and Lisa Shumaker)
