| NEW YORK
NEW YORK U.S. crude jumped to a 28-month high of $100 a barrel on Wednesday, as investors weighed the risk of Middle East unrest spreading from Libya to bigger exporters including Saudi Arabia.
U.S. crude for April delivery rose 2.8 percent to settle at $98.10 per barrel after soaring as high as $100.
Brent, which has posted the biggest three-day gain since October 2009, rose 5.3 percent to settle at $111.25, its highest close since before the collapse of U.S. investment bank Lehman Brothers in 2008.
The standoff between an increasingly isolated Libyan strongman Muammar Gaddafi and rebel factions now in control of oil-rich eastern Libya has cut output in the world's No. 12 crude exporter by at least 25 percent, or 400,000 barrels a day, according to Reuters calculations.
The death toll from Gaddafi's attempts to crush a revolt against his four-decade rule may already be as high as 1,000 people, Italy's Foreign Minister said.
Austria's OMV was the latest oil company to confirm it was cutting production in Libya, although some crude shipments were still leaving the country, with at least three oil tankers dispatched since Tuesday.
The unrest has traders wondering when OPEC and its kingpin producer Saudi Arabia could boost oil output and stem the price surge. Saudi officials have said the kingdom, which holds the bulk of OPEC's spare production capacity, would act to make up for any major disruption.
"It is imperative the Saudis release some extra barrels into the market now to calm the situation, rather than simply trying to talk the price down," said Edward Meir, an analyst at MF Global in New York.
FEAR OF 2008 REDUX
Oil's surge fed worries about the impact of energy prices on the U.S. economy, dragging equities markets lower. In 2008, crude's advance to a record $147 a barrel cut demand and contributed to the deepest global economic downturn since World War Two.
U.S. oil prices rallied through a long-term uptrend resistance, on course for the biggest weekly gain since the financial crisis. (Graphic: link.reuters.com/cyv28r )
Prices seesawed in a range as wide as $5 a barrel through the day, as traders mulled whether popular revolts sweeping across North Africa could spread to big crude exporters like Saudi Arabia.
"Oil prices are not likely to fall any time soon," said Shelley Goldberg, commodities and energy strategist at Roubini Global Economics in New York.
"It's not all about Libya, but a fear these movements will spread further across the Middle East and North Africa region. We're no longer in the early stages of uprisings, but we're probably somewhere in the middle stages, with more ahead."
Protests may grow in Bahrain or spill over into neighboring Saudi Arabia. While the Saudi royal family has faced no opposition in the streets, hundreds of people on Wednesday backed a Facebook page campaigning for a "day of rage" across the country next month.
"Saudi Arabia is nervous about potential opposition too and the market senses that," said Gene McGillian of Tradition Energy in Connecticut.
Many analysts also expected Libya's violence to take a heavy toll on the North African country's oil output, potentially crimping exports for months or years.
BRENT SPREAD WIDENS
Brent traded at a $13.43 a barrel advantage to U.S. WTI post-settlement, widening from a $10.85 gap on Tuesday, as traders bet Middle East unrest would crimp European oil supply. Libyan exports usually feed a quarter of Italy's oil demand.
However, the spread has narrowed sharply from a record $16.51 hit on February 17.
Weekly U.S. oil inventory data from industry group API, released late Wednesday, showed U.S. petroleum stocks rose 163,000 barrels last week, after analysts polled by Reuters had forecast a bigger, 1.3 million barrel rise.
Distillate inventories fell a less-than-expected 1.4 million barrels and gasoline supplies fell by 1.6 million barrels, API data showed, bucking analyst expectations for a rise.
More authoritative weekly inventory figures are due on Thursday from the government's U.S. Energy Information Administration.
(Additional reporting by David Sheppard and Gene Ramos in New York; Zaida Espana in London, Francis Kan in Singapore; Editing by Walter Bagley and David Gregorio)