Brent crude rose over $1 on Thursday to $116.78 a barrel, heading for its biggest quarterly gain in almost two years as Middle East supply worries led concerns.
Traders, analysts and investors see a new floor for prices around $100 a barrel, supported by supply risks and economic growth after the most turbulent and volatile quarter for the oil market since the end of 2008.
Brent crude for May was up $1.22 to $116.35 barrel at 1235 GMT, less than $4 from a 2-1/2-year high near $120 on February 24. Brent fell below $108 in the aftermath of Japan's March 11 earthquake.
U.S. crude was up $1.04 to $105.31, heading for a more than 15 percent quarterly gain.
Market attention remained firmly on the Middle East where dozens were missing and more than 300 were detained after a crackdown in Bahrain targeting activists and Shi'ites, the opposition said on Thursday.
Friday prayers may be a key issue supporting the market now, and some of the focus is starting to shift back to Japan and the cost of rebuilding the country, said Thorbjoern Bak Jensen, an analyst at Global Risk Management.
In recent months, the end of Friday prayers has been a favored time for protests in the region.
Worries also mounted about Syria, where more than 60 people have died in protests, after the president defied calls to lift a decades-old emergency law and hundreds marched in Latakia on Wednesday.
In Yemen, the president's 32-year rule edged closer to collapse after his efforts to appease protesters were snubbed by the opposition.
Japan's oil product sales rose 0.8 percent in February from a year earlier as improvement in the economy helped boost gasoline demand for a fourth straight month. The outlook for consumption in the aftermath of the earthquake and tsunami remained uncertain.
Lost nuclear power and reconstruction efforts could boost Japanese demand for oil to generate electricity. The International Energy Agency has said an additional 200,000 barrels per day will be needed after Japan's nuclear disaster. But traders say the impact on world supply could be higher.
A parcel bomb attack on a nuclear lobby group in Switzerland highlighted the backlash against nuclear development plans in the aftermath of the Japanese disaster at Fukushima.
The nuclear issue in Japan could have quite significant consequences. A lot of countries are now debating nuclear and new building is on hold, a gasoil trader said.
But others say lower Japanese output could ultimately weaken imports, balancing against a further drop in oil supply from the Middle East.
There seems to be a statistical surplus in the system given that Saudi production has more or less offset the Libyan shortfall, while weak Japanese imports will go a long way in further alleviating demand pressures, Edward Meir, senior commodity analyst at MF Global, said in a note.
WAR IN LIBYA
The prospect of a protracted civil war in Libya remained as forces loyal to Libyan leader Muammar Gaddafi regained key oil ports at Ras Lanuf and Brega on Wednesday, underscoring the vulnerability of rebel forces in the absence of Western air strikes.
Gaddafi's foreign minister defected and flew to Britain on Wednesday, while government sources told Reuters that U.S. President Barack Obama had signed a secret order authorizing covert U.S. government support for rebel forces.
The United States is part of a coalition with NATO members and some Arab states, which is conducting air strikes on Libyan government forces under a U.N. mandate aimed at protecting civilians opposing Gaddafi.
Libyan oil shipments remain at a standstill, with no one attempting to hire tankers due to violence and the impact of sanctions, shipping sources said on Wednesday.
Stocks headed for a third straight quarterly rise as the euro advanced and improving economic outlook for the U.S. supported worldwide gains. Weekly U.S. initial jobless claims fell more than expected, to a four-week low and the second lowest since July 2008 supporting oil prices.
There has been good economic data out of Germany and strong CPI numbers out of Europe. The euro is well bid, which has helped push oil higher, said Rob Montefusco, a trader at Sucden Financial.
(Additional reporting by Nia Williams, Claire Milhench and Alejandro Barbajosa; editing by Jason Neely and Jane Baird)