* Yemen tension escalates, Total warns on LNG supplies
* U.S. gasoline stocks fell 7.9 mln bbls last week-API
* Israeli tank fire kills 4 in Gaza, Syria protests expand
(Adds U.S. equity market losses, API data showing 7.9 million
barrel U.S. gasoline draw)
By Joshua Schneyer
NEW YORK, March 22 (Reuters) - Oil prices rose on Tuesday
as unrest in Yemen threatened to crimp energy exports from the
Gulf region and potentially spill over into neighboring Saudi
Arabia.
French oil giant Total <TOTF.PA> warned buyers of liquefied
natural gas from its Yemen LNG project that shipments from the
country could face cuts due to escalating political unrest,
although they remain normal for now. []
Thousands of Yemeni protesters took to the streets on
Tuesday, clamoring for President Ali Abdullah Saleh to step
down. Several top officials have already abandoned Saleh, who
warned that his country would descend into civil war if he were
forced to quit. []
Yemen, which borders top oil exporter Saudi Arabia to the
north, pumps around 290,000 barrels per day of oil, largely for
export, and ships 0.9 billion cubic feet per day of LNG, about
9 percent as much as top LNG exporter Qatar.
"The situation in the Middle East is still very bullish for
oil," said Phil Flynn, analyst at PFGBEST Research in Chicago.
"The unrest spreading (there) on top of the conflict in Libya
is still the market focus."
In Libya, a bloody standoff between the Muammar Gaddafi
regime and rebels in control of the country's east has already
slashed oil production from the OPEC country by around 75
percent, to below 400,000 barrels a day (bpd). []
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Technical chart for U.S. crude futures:
http://link.reuters.com/maq68r
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Brent crude <LCOK1> for May rose 74 cents to settle at
$115.70 a barrel. U.S. crude futures for April <CLc1> rose
$1.67 to settle at $104 a barrel in light volume on the
contract's expiration day. The more active May contract <CLK1>
settled up $1.88 a barrel at $104.97.
U.S. crude futures broke above a key technical resistance
level, clearing the way for a run higher, as momentum builds
for a challenge of the year high near $107 a barrel.
[]
Oil rose even as stock markets fell, snapping a three-day
winning streak, with trading volumes across U.S. equities
markets hitting a 2011 low. []
U.S. oil futures handily outpaced European Brent, narrowing
the transatlantic spread <CL-LCO1=R>.
"Generally, Middle East tensions would strengthen Brent,"
said Bill O'Grady at Confluence Investment Management in St.
Louis. "But the U.S. expiration trade has become really choppy,
with a lot of financial players trying to figure out how to
play this market and maybe some short-covering going on."
REVERSING LOSSES
U.S. crude reversed an earlier intraday drop to a low of
$101.43, which came after Japan said it would release oil from
its strategic stockpiles.
The releases could help ease supply concerns following the
recent earthquake and tsunami which forced the idling of
nuclear reactors and led to power outages. []
But Japan's crisis may also prove bullish for oil, analysts
said. The outages should lead the world's No. 3 crude importer
to boost oil-fired power generation, increasing demand, Goldman
Sachs analysts said on Monday. []
The U.S. dollar <.DXY> slumped to a 15-month low against
other major currencies as a resumption in risk appetite spurred
demand for currencies and commodities that could offer higher
returns. []
Oil inventories in top consumer the United States likely
rose last week for a third consecutive increase, gaining 2
million barrels on higher imports, according to a Reuters poll
of analysts ahead of stocks data to be released Wednesday by
the U.S. Energy Information Administration. []
Inventory data from industry group American Petroleum
Institute late on Tuesday showed U.S. crude stocks rose a
less-than-expected 970,000 barrels last week, while U.S.
gasoline stocks plunged a more-than-expected 7.9 million
barrels. []
ESCALATING UNREST
Adding to oil supply concerns were risks that unrest could
spread to bigger oil producers that have so far not faced major
upheaval, including Saudi Arabia.
"An unstable Yemen is always a headache for the Saudis and
a refugee crisis would become a significant problem," said
Samuel Ciszuk, Middle East analyst at IHS in London.
"Not the least as Islamic militants would take the chance
to blend in and enter the kingdom."
Protests also grew on Tuesday in Syria, where hundreds of
people marched in southern towns for a fifth day and the
government arrested an opposition figure. [].
Tensions also flared in Gaza, where Israeli tank fire
killed four Palestinians. []
Iraq's oil minister said OPEC is counting on oil prices
stabilizing around 30-month highs near $120 a barrel.
That $120 oil price range is an "acceptable" level that
would not hinder global growth, minister Abdul-Kareem Luaibi
said. []
(Additional reporting by Nia Williams in London, Alejandro
Barbajosa in Singapore, Gene Ramos, Edward McAllister, David
Sheppard and Robert Gibbons in New York; editing by Jim
Marshall and Marguerita Choy)
