* Tunisia unrest triggers investor unease
* Global supplies still remain ample
* Coming Up: ECB's Draghi holds news conference at 1330 GMT
(Recasts, changes dateline from SINGAPORE)
By Ron Bousso
LONDON, Feb 7 Oil rose above $117 a barrel on
Thursday as traders awaited word from the European Central Bank
that could confirm speculation the region's troubled economy
was turning a corner.
Brent has steadily risen over the past three weeks as
positive economic data in key economies boosted the outlook for
oil consumption, while simmering tensions in the Middle East
have led to supply concerns, further supporting prices.
March Brent futures were trading up 55 cents at
$117.28 per barrel at 0917 GMT, the highest level since mid-
September, while U.S. crude added 15 cents to $96.77.
Investors were waiting for European Central Bank (ECB)
President Mario Draghi's views on the region's economy at a news
conference at 1330 GMT following the body's policy meeting.
"The European Central Bank (ECB) press conference today will
be very important for overall sentiment over the euro zone,"
Bjarne Schieldrop, an analyst at SEB, said.
Brent's strong backwardation, when front-month prices are
higher than those in the future, are providing further support
to the benchmark as they offer attractive rollover yields to
investors, Schieldrop said.
"The backwardation is an expression of a tight physical
market, which explains why Brent has been gaining ground."
Oil markets have been drawing comfort in recent weeks from
signs the euro zone economy may have neared its lowest point,
while the economies of top oil consumers United States and China
have signalled pickups in activity.
The Chinese economy ended seven straight quarters of slowing
growth in the fourth quarter by growing 7.9 percent while the
U.S. services sector extended a three-year expansion in January
and the employment index hit a seven-year high.
Markit's Eurozone Composite PMI, based on business activity
across thousands of companies, and a good gauge of economic
growth, rose in January to a 10-month high of 48.6 from 47.2 in
Still, investors have been speculating about leadership
uncertainties in Spain and Italy and watching for comments from
European leaders as well as the outcome of the ECB meeting.
TENSIONS IN TUNISIA
Increasing unrest in Syria and Tunisia are further
supporting oil prices as investors fear supply disruptions in
the Middle East, the world's largest oil producing area.
Worries about supply escalated after Tunisia's ruling
Islamists dissolved the government to calm street riots,
bringing back memories of the Arab Spring revolts that shook the
region two years ago.
Tunisia is located between major oil producers Algeria and
Libya. Adding to worries was Syria's ongoing struggle to end a
two-year old conflict and violence in Egypt that killed 59
people last month.
"Geo-political tensions will keep the heat under the
market," said Tony Nunan, an oil risk manager at Mitsubishi
U.S. crude was also under pressure after data showed rise in
oil inventories. Crude stocks rose to 371.7 million barrels last
week and have been building to near-record seasonal highs. The
builds have come in part due to higher domestic oil production,
which has risen to near 18-year highs.
(Additional reporting by Ramya Venugopa in Singapore; editing
by Himani Sarkar and Keiron Henderson)