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Reuters, Published March 24 2014

Oil above $107 as supply concerns balance China data

LONDON - Crude oil steadied on Monday, weighed down by Chinese data pointing to lower demand in the world's biggest energy consumer, but supported by potential disruption to oil supplies due to the Ukraine crisis and turmoil in Libya.

China's manufacturing activity shrank in March, a preliminary private survey showed, adding to a string of weak indicators this year that have reinforced concerns about a slowdown. The government aims to reduce the economy's dependence on exports, but investors are worried that growth is cooling faster than expected.

Oil, however, was underpinned by supply concerns with the risk that a confrontation with the West over Ukraine could lead to a disruption of energy supplies from Russia, a major supplier of oil and gas to Europe.

Libyan oil exports are also running at more than 1 million barrels per day (bpd) below capacity thanks to civil unrest.

Brent crude for May was up 20 cents at $107.12 a barrel by 1430 GMT. The oil benchmark fell for a fourth straight week last week. U.S. oil rose 50 cents to $99.96 a barrel.

"Oil is caught," said David Hufton, managing director of London brokerage PVM Oil Associates.

"Anything that threatens economic growth especially in emerging economies is negative for oil demand and therefore bearish. On the other hand, anything that threatens supply, real or perceived, is bullish for oil prices."

Weaker-than-expected Chinese economic data is raising expectations the government could step in to stimulate the economy. Chinese equities have risen on hopes of a stimulus.

Brent crude has lost almost 4 percent this year, giving up gains after rising to $112 in early March, a more than two-month high, amid geopolitical risks as Russia took control of Ukraine's Crimea region.

Concerns that tensions in the region could still worsen helped stem declines. NATO's top military commander said on Sunday Russia had built up a "very sizeable" force on its border with Ukraine and Moscow may have a region in another ex-Soviet republic, Moldova, in its sights after annexing Crimea.

Russian troops, using armoured vehicles, automatic weapons and stun grenades, seized some of the last military facilities under Ukrainian control in Crimea on Saturday. Russian President Vladimir Putin formally annexed the Black Sea peninsula the day before.

Worries of continued unrest in Libya and other oil exporting countries have also helped put a floor under oil prices, even though the market has come off with the end of the severe winter weather in the Northern Hemisphere, Nunan said.

Rebels have occupied ports and oilfields, depressing Libya's oil production to below 250,000 bpd, the state-run National Oil Corp (NOC) said. The NOC said on Monday it shut the El Feel oilfield, because the pipeline to the Mellitah port was closed.

National oil production will fall to around 150,000 bpd on Tuesday as result, leaving almost nothing for export. An NOC spokesman said he did not know the reason for the pipeline closure.

An oil tanker seized by U.S. forces after it loaded crude at a Libya port held by anti-government rebels has docked back in the capital Tripoli, a Reuters witness said on Sunday.

U.S. special forces boarded the tanker a week ago off Cyprus, days after it left Es Sider port, which is controlled by rebels who demand more autonomy and oil wealth in defiance of the central government.