* Brent up 1.4 pct this week to near $116 on Middle East
unrest
* TECHNICALS: Brent is temporarily neutral
* Coming Up: U.S. GDP for fourth quarter; 1230 GMT
(Adds context on Yemen protests, rising summer demand)
By Alejandro Barbajosa
SINGAPORE, March 25 (Reuters) - Brent crude was steady near
$116 on Friday ahead of protests planned in Yemen and Bahrain,
heading for a third straight weekly gain and up 1.4 percent
since western powers last weekend launched a military campaign
in Libya.
Brent crude for May shed 15 cents to $115.57 a barrel
at 0837 GMT, about $4 from a 2-1/2-year high near $120 a month
ago, while U.S. crude fell 20 cents to $105.40.
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 and raising
concern the group may struggle to fill 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 J.P. 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 debt have slowed oil
price gains this week, after the country's prime minister
resigned on Wednesday, falling victim to the European Union's
rolling financial crisis and prompting Standard & Poor's to
downgrade the credit ratings for the nation.
European leaders agreed on Thursday to increase their
financial rescue fund to the full 440 billion euros by June.
Trading volumes in 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.
MIDDLE EAST
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.
"If we assume that Libya's 1 million barrels a day of
exports has been more or less replaced by Saudi production
(leaving aside crude qualities for the moment) this means that
output from the Middle East is relatively unchanged," said
Edward Meir, senior commodity analyst at brokers MF Global.
In Yemen, the opposition stepped up efforts to remove
President Ali Abdullah Saleh on Thursday, dismissing his offer
to stand down after a presidential election at the end of the
year.
Protesters planned a March 25 "Friday of Departure" rally in
a country that sits near shipping lanes that skirt the Arabian
peninsula and from where al Qaeda has attempted attacks on Saudi
Arabia.
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.
At least 37 people were killed in the city of Deraa in Syria
on Thursday as protests grew.
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.
J.P. Morgan says additional supplies are required from the
Organization of the Petroleum Exporting Countries in the run-up
to northern hemisphere summer demand, before the group's next
meeting in June.
"By then, it will be too late to prevent higher prices and
could extend what we see as a mid-quarter blip to a much more
serious and destabilizing price surge that could distort
stock-holding behavior and economic growth," the bank said.
