* Portuguese PM's resignation reignites bailout fears
* Positive German economic data proves supportive
* Coming up: EU summit in Brussels; US weekly jobless data
(Recasts, updates prices, previous SINGAPORE)
By Claire Milhench
LONDON, March 24 (Reuters) - Oil rose on Thursday, as
concerns about instability in the Middle East outweighed worries
about the economic health of the eurozone following the
resignation of Portugal's prime minister.
May Brent <LCOc1> rose 18 cents to $115.73 a barrel at 0919
GMT. U.S. crude <CLc1> was up 68 cents to $105.43, supported by
a steep decline in U.S. gasoline stockpiles for the week to
March 18.
The fall in gasoline inventories was due to refiners
shedding winter grade gasoline ahead of the shift to summer
grade, and drove U.S. crude to its highest settlement since 2008
on Wednesday. []
"We have a tug of war between positive and negative factors
for oil prices," said Carsten Fritsch, an oil analyst at
Commerzbank.
"The bullish factors are still in place: the war in Libya,
unrest in other parts of the Arab world, a greater need for
fossil fuels in Japan, and pretty bullish inventory data
yesterday are all supportive of higher oil prices."
Fritsch said that despite the resignation of Portugal's
Prime Minister Jose Socrates, which had weighed on oil
overnight, oil prices could probably rise further.
"The developments in Libya and the Middle East are still the
most important factor to watch," he said.
Socrates resigned on Wednesday after the Portuguese
parliament rejected his government's latest austerity measures,
which were designed to avoid a bailout. []
The resignation was seen as increasing the likelihood that
Portugal will join Greece and Ireland in requiring a bailout
from the European Union, putting the euro under pressure.
The dollar <.DXY> strengthened by 0.2 percent against a
basket of currencies. []
Eurozone leaders will meet in Brussels later on Thursday for
a two-day summit. Portugal has a large debt redemption to meet
in April but according to its constitution it does not have time
to hold a general election before then, said Thorbjorn Bak
Jensen, an oil market analyst at Global Risk Management.
"The resignation of the Portuguese prime minister is
creating some risk on/risk off (trading), depending on which way
the wind is blowing," he said.
"We have had some positive numbers this morning for German
manufacturing and service PMI [], but we still have
this Portugal ghost hanging over us. What are they going to do?"
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic - record March U.S. gasoline drawdowns:
http://r.reuters.com/fys68r
Graphic - U.S. crude futures approach overbought levels:
http://link.reuters.com/zut68r
Reuters Insider: Christopher Henwood on EIA data:
http://link.reuters.com/zys68r
More on Middle East unrest: [][]
Libya graphics http://link.reuters.com/neg68r
Oil technicals []
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MIDDLE EAST TENSIONS
Western warplanes hit Libya for a fifth night. The
U.N.-backed assault has so far failed to stop Muammar Gaddafi's
tanks shelling rebel-held towns or dislodge his armour from a
strategic junction in the east. []
Palestinian rockets struck two cities deep in Israel on
Wednesday, prompting Prime Minister Benjamin Netanyahu to
threaten lengthy "exchanges of blows" with the Hamas-ruled Gaza
Strip. []
Syrian forces killed six people in an attack on protesters
in a mosque complex in the southern city of Deraa, and later
opened fire on hundreds of youths marching in solidarity,
witnesses said. []
In the Arabian peninsula, Yemen's president offered to step
down by the end of the year in a bid to appease mounting demands
for his resignation, but opposition groups showed no sign of
easing up on efforts to force him out. [].
(Additional reporting by Alejandro Barbajosa, editing by
William Hardy)
