* Brent up 1.5 pct this week near $116 on Middle East unrest
* TECHNICALS: Brent is temporarily neutral
* Coming Up: U.S. GDP for fourth quarter; 1230 GMT
(Adds context on European financial rescue fund, Portugal)
By Alejandro Barbajosa
SINGAPORE, March 25 (Reuters) - Brent crude was steady near
$116 on Friday ahead of protests planned in Bahrain, heading for
a third straight weekly gain and up 1.5 percent since western
powers last weekend launched a military campaign in Libya as
turmoil flared in Yemen and Syria.
Brent crude for May shed 8 cents to $115.64 a barrel
at 0600 GMT, about $4 from a 2-1/2-year high near $120 a month
ago, while U.S. crude slipped 19 cents to $105.41.
After the first rounds of a U.N.-backed offensive to disable
Libya's air defences and prevent Muammar Gaddafi's forces from
launching attacks on civilians, NATO said it would enforce a
no-fly zone over the country but stopped short of taking full
command.
Libyan oil exports of about 1.3 million barrels per day
(bpd) have virtually vanished, eroding spare capacity as Saudi
Arabia and other OPEC members increased production, raising
concern the group may struggle to compensate for bigger
disruptions.
"So long as ongoing problems in the Middle East continue to
elevate risks of a further supply disruption, there is a strong
likelihood of a price spike in the second quarter as the market
demands additional oil to meet summer demand," said JP Morgan
analysts headed by Lawrence Eagles.
The bank on Friday raised its forecast for Brent in the
second quarter to $118 from $105, saying "dips in volatility,
like the one that we saw this week, appear to offer good entry
points for hedging strategies."
Barclays Capital also raised its projection for 2011 Brent
to $112 from $91.
Concerns about Portugal's sovereign credit rating have
slowed oil price gains this week, after the country's prime
minister resigned on Wednesday, falling victim to the European
Union's rolling sovereign debt crisis and prompting Standard &
Poor's to downgrade the credit ratings for the south European
nation.
European leaders agreed on Thursday to increase their
financial rescue fund to the full 440 billion euros by June.
Trading volumes oil futures markets have been thin this week
as investors await the next turn of events in the Middle East
and weigh developments around Japan's nuclear crisis.
Allied warplanes hit military targets deep inside Libya on
Thursday but failed to prevent tanks re-entering the western
town of Misrata, underlining the difficulty of the mission to
protect Libyans from government forces.
Turkey had wanted to be able to use its NATO veto to limit
military operations against Libyan infrastructure and avoid
casualties among Muslim civilians from air raids. France
believes having NATO in full charge would erode Arab support
because of U.S. unpopularity in the Arab world.
In Yemen, soldiers loyal to President Ali Abdullah Saleh
clashed with army units backing opposition groups demanding he
step down, while in Syria, at least 37 people were killed in the
city of Deraa, as protests grew.
In Bahrain, a small island country that lies less than 100
kilometres from the hub of the Saudi Arabian oil industry,
opposition activists said they planned to hold a day of
demonstrations on Friday in defiance of a ban on all public
gatherings.
Oil prices will stay above $100 a barrel through 2013, a
Reuters poll showed on Thursday, as analysts sharply revised
their forecasts on expectations of a protracted outage in Libya
and uncertainty about the Middle East and North Africa, which
combined produce more than a third of the world's oil.
