U.S. crude prices jumped to their highest since September 2008 on Friday and Brent rose above $116 a barrel as Libyan security forces cracked down on protesters in Tripoli and clashed with rebels near the major oil terminal of Ras Lanuf.

Investors watched for extended supply disruptions, weighing the threat that Libya's key oil sector could get embroiled in the revolt, as well as the possibility that spreading protests and unrest could affect other producers in the region, especially top OPEC exporter Saudi Arabia.

Protests in Yemen, Oman and Bahrain have all helped fuel uncertainty about the region after protests toppled regimes in Egypt and Tunisia.

U.S. crude futures for April delivery rose $2.18 cents to $104.09 a barrel at 12:34 p.m. EST, after hitting $104.32, the highest since front-month crude hit $106.91 on September 29, 2008.

There has ... been a series of rising highs and rising lows, indicating the market maintains a considerable degree of inherent strength, Michael Fitzpatrick, editor of the Kilduff Group industry newsletter in New York, said in a note.

Prices are well beyond the moving averages so there is an active buy signal, he noted.

U.S. crude prices were well above the $81.96 200-day moving average and also the $90.81 50-day and $97.72 10-day moving averages, according to Reuters data.

Brent crude futures for April delivery rose $1.39 to $116.18 a barrel, having reached a high of $116.49.

Brent's premium to its U.S. counterpart was just above $12 a barrel, down about 77 cents from the previous session and well below last week's record $16.91.

Brent's price rise has been stronger because Europe and the Brent market is seen as more vulnerable to supply disruptions from Libya and the region.

Tension in the Middle East is like a runaway train, said Michael Hewson, an analyst at CMC Markets in London. Once it starts, it's very difficult to stop. And if there is a danger that it impacts the supply chain, people will understandably get nervous.

Libyan leader Muammar Gaddafi's forces battled rebels on several fronts in a worsening of the country's crisis and unrest erupted in the capital when gunmen fired to break up crowds shouting Gaddafi is the enemy of God.

Rebels fought forces loyal to Gaddafi on the outskirts of the key oil terminal of Ras Lanuf as the head of Libya's rebel council vowed victory or death.

Al Jazeera television also reported that an oil facility at Zueitina, south of Benghazi was damaged and on fire.

The International Energy Agency said that one million barrels per day (bpd) of Libya's oil output was currently shut, lifting its estimate to the higher end of the bracket it gave on Wednesday when it pegged shut output at between 850,000 bpd and 1 million bpd.

In Saudi Arabia's neighboring Yemen, President Ali Abdullah Saleh rejected an opposition plan for him to transfer power this year, as demonstrations swelled into hundreds of thousands.


Libya's turmoil and the regional unrest pushed the closely watched U.S. monthly employment report to the background.

U.S. non-farm payrolls rose in February, hitting a nine-month high, and the jobless rate slipped to a nearly two-year low of 8.9 percent.

But U.S. stocks fell as rising crude prices weighed on equities after Wall Street posted its best one-day rise in three months on expectations February's payrolls would grow more than they did.

(Additional reporting by Gene Ramos in New York, Claire Milhench in London and Florence Tan in Singapore; Editing by Marguerita Choy)