* U.S. crude holds gains, Brent extends losses after data
* Traders unwind Brent/WTI arbitrage positions
* Coming up: EU summit in Brussels
(Updates prices, adds new quotes, data)
By Claire Milhench
LONDON, March 24 (Reuters) - Brent crude fell over $1 on
Thursday after mixed U.S. data, against a backdrop of
instability in the Middle East and new eurozone debt worries
following the resignation of Portugal's prime minister.
At 1335 GMT, May Brent <LCOc1> was down 86 cents to $114.69
a barrel after dipping over $1 to $114.50 on mixed U.S. data.
U.S. crude oil futures <CLc1> pulled back in choppy trading,
and were down 27 cents to $105.48 after data showing U.S.
February durable goods orders fell against expectations for a
small rise. []
The durable goods number offset a separate report showing
that U.S. initial jobless claims fell week on week.
[]
Brent crude prices were lower ahead of the data on
heightened concerns about euro zone debt problems following the
resignation of Portugal's Prime Minister Jose Socrates.
"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
Socrates, which had weighed on Brent 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. []
Eurozone leaders will meet in Brussels on Thurasday for a
two-day summit to address sovereign debt problems which have
dogged the region. []
Portugal faces a bond redemption of over 4 billion euros
($5.63 billion) in mid-April but under its constitution does not
have time to hold a general election before then.
"The resignation of the Portuguese prime minister is
creating some risk on/risk off (trading), depending on which way
the wind is blowing," said Thorbjorn Bak Jensen, an oil market
analyst at Global Risk Management.
Technical factors are also playing a part. Rob Montefusco,
an oil trader at Sucden Financial in London, said that with the
differential between U.S. crude and Brent narrowing over the
last few days, traders have been unwinding their Brent/U.S.
arbitrage positions.
"(The differential) went under $9 today -- it might find
some support at around the $8 level. There is still a fear
factor because of what's going on in the Middle East, and China
still has a thirst for oil so I don't see it correcting too much
further to the downside," he said.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic of record March U.S. gasoline drawdowns
http://r.reuters.com/fys68r
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, and ABC News
reported that a French fighter had shot down a Libyan warplane.
[].
The U.N.-backed assault has so far failed to stop Muammar
Gaddafi's tanks shelling rebel-held towns or dislodge his tanks
from the port of Misrata port. [] []
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 Yemen, presidential guards loyal to President Ali
Abdullah Saleh clashed in the town of Mukalla with army units
backing opposition groups and protesters demanding his removal.
[]
Yemen is not a major oil exporter, but it does control a
critical oil chokepoint which links the Gulf to the
Mediterranean through Egypt's Suez Canal, Michael Lo, an energy
analyst at Nomura, said in a note.
(Additional reporting by Alejandro Barbajosa, Robert Gibbons
and Nia Williams; editing by Jason Neely)
