* Bad weather cuts Iraq south oil exports
* U.S. housing, confidence data set to improve
* Brent-U.S. crude spread at narrowest since September
(Previous SINGAPORE, updates prices)
By Alex Lawler
LONDON, Jan 14 Oil rose above $111 a barrel on
Monday as concern about supply resurfaced amid growing optimism
over signs that the world's biggest economies are on their way
to a steady recovery.
A cut in Saudi Arabian production last month, pipeline
sabotage in Yemen and a weather-related drop in Iraqi shipments
have reduced output, while fighting in Syria and Iranian naval
exercises in the Strait of Hormuz reminded investors of the risk
of wider disruption to Middle East supply.
"If there is any supply side concern in the Middle East, it
will reflect in the risk premium and support prices," said Ben
Le Brun, market analyst at Sydney-based OptionsXpress. "Those
concerns are offsetting the losses we saw in oil on Friday."
Brent crude gained 60 cents to $111.24 a barrel by
0935 GMT, after settling 1.1 percent lower on Friday. U.S. oil
rose 49 cents to $94.05.
"In just the first fortnight of 2013, supply has already
materially disappointed," said analysts at Morgan Stanley
including Hussein Allidina, in a report.
In a temporary setback for supplies, bad weather cut oil
exports from Iraq's southern port of Basra to 960,000 barrels
per day (bpd) on Sunday, down from 2.35 million bpd a day
earlier, a shipping source said.
The spread between U.S. crude and Brent CL-LCO1=R is
continuing to narrow, trading on Monday at the narrowest since
September. U.S. crude is gaining on Brent following the start-up
of the expanded Seaway pipeline, which aims to ease the glut of
crude in the U.S. Midwest.
The supply outages arise as evidence grows of a gradual
revival in the world's top economies, bolstering oil demand,
which forecasters including the International Energy Agency
currently expect to be sluggish in 2013.
The U.S. economy is expected to grow by 2.5 percent in 2013,
improving to 3.5 percent growth in 2014, Fed official Charles
Evans said on Monday. Surveys this week of U.S. consumer
confidence and of house builder sentiment are expected to
China's annual economic growth is expected to have quickened
to 7.8 percent in the fourth quarter, a Reuters poll showed,
after seven quarters of weaker expansion. The figures will be
released on Friday.
(Reporting by Manash Goswami and Alex Lawler; Editing by Alison