* Brent extends losses after data, U.S. crude holds gains
* Traders unwind Brent/WTI arbitrage positions
* Coming up: EU summit in Brussels
(Updates prices, adds new quotes)
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 1443 GMT, May Brent <LCOc1> was down 9 cents to $115.46 a
barrel after dipping over $1 to $114.50 on mixed U.S. data.
U.S. crude oil futures <CLc1> pared gains in choppy trading,
but was still up 50 cents on the day to $106.25 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 already 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 Thursday 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.
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More on Middle East unrest: [][]
Libya graphics http://link.reuters.com/neg68r
Oil technicals []
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MIDDLE EAST TENSIONS
The coalition enforcing a U.N.-backed no-fly zone over Libya
fired 14 Tomahawk missiles at the forces of leader Muammar
Gaddafi overnight, the U.S. military said [].
But it failed to prevent tanks reentering the western town
of Misrata overnight and besieging its main hospital.
[]
At least 37 protesters were killed in a confrontation with
security forces in Syria on Wednesday, a hospital official said.
[] Around 20,000 people marched on Thursday in the
funerals for nine of those killed.
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.
[].
Germany has joined a growing number of western nations
urging Syria to halt the violence against protesters
[].
"We expect the MENA unrest to pose further upside risks to
oil prices," James Zhang, an energy analyst at Standard Bank
Commodities said in a note.
"That said, the physical market appears to be well supplied
for now. Given the near record high speculative length in the
oil market and a seasonal slowdown in demand, the downside risk
also increases."
(Additional reporting by Alejandro Barbajosa and Robert
Gibbons)
