Oil above $112 after Middle East tensions (Reuters) (01-03-2011)

SINGAPORE - Brent crude rose above $112 a barrel on Tuesday amid the unrest in the Middle East and North Africa which threat to further reduce in crude supplies even as Saudi Arabia ramped up output to cover disruption to Libyan exports.

Brent futures for April rose 41 cents to $112.21 a barrel by 0736 GMT. The contract gained over 10 percent in February, its biggest monthly percentage rise since May 2009. U.S. crude rose 33 cents to $97.30 a barrel.

February manufacturing growth in No. 2 oil importer China slowed to a six-month low. The U.S. crude oil inventories on the other hand likely increased for the seventh consecutive week last week on higher imports.

Crude oil shipments from Libya are at a virtual standstill as reduced output and bad weather hamper exports from the world's 12th-largest producer. According to a Saudi source though, Middle East has another 3.5 million barrels per day of spare capacity, even after it raised output to around 9 million bpd to plug the gap left by Libya.

China targets 7 percent per year annual economic growth from 2011-2015, down from the average growth of 11.2 percent in the last five year period.

In the U.S., crude stocks are expected to rise 1.2 million barrels last week while inventories for oil products are likely to fall.

Source: Reuters