UPDATE 6-Oil reaches four-month high as Egypt stokes supply fears
* Investors worry Egypt unrest could spill into producer nations
* U.S. jobless claims fall to six-year low
NEW YORK, Aug 15 (Reuters) - Brent oil prices hit a four-month high on Thursday on fears escalating violence in Egypt could affect the Suez Canal or spread across the Middle East, where supplies already face disruption.
Hundreds of supporters of Egypt's Muslim Brotherhood stormed a government building in Cairo on Thursday and set it ablaze, the day after the government declared a state of emergency following deadly clashes between riot police and supporters of ousted President Mohamed Mursi. Hundreds marched in Alexandria, Egypt's second-largest city, as well.
Egypt is not a major producer of crude oil, but is home to the strategically important Suez Canal and the Sumed pipeline. Investors fear the unrest could choke supply routes or spill over into oil-exporting neighbors.
"Disruptions at the Suez Canal are unlikely, but markets never move on what's likely. They move on fear," said Michael Hewson, an analyst at CMC Markets.
The Suez Canal and Egyptian ports were operating normally, shipping sources said on Thursday.
Front-month September Brent, which expires on Thursday, was trading 97 cents higher at $111.17 at 11:00 EDT (1500 GMT) after jumping over a dollar earlier to $111.53, its highest level since April 2. The more actively-traded October contract rose 85 cents to $109.67.
U.S. oil rose 53 cents to $107.38.
The front-month U.S. crude contract briefly slipped around 9:15, as U.S. stock futures fell following a weaker-than-expected earnings report by global retailer Wal-Mart .
U.S. stocks fell most since late June on investor worry that the Federal Reserve would soon start to scale back its stimulus after a raft of data on housing, inflation and jobless claims pointed to a recovering economy.
"When you put all that data together, it increases the odds of tapering," said Phil Flynn, analyst at the Price Futures Group in Chicago, Illinois.
Oil product exports from Libya's 220,000 barrel-per-day refinery at Ras Lanuf are resuming after runs restarted, a shipping source and a senior Libyan industry source said on Thursday.
On Wednesday, the deputy oil minister said output had fallen to 600,000 barrels per day (bpd) due to field problems.
In Iraq, officials said the government was undecided about whether to carry out full maintenance on its Basra export terminal in September, creating more uncertainty. 1/2ID:nL6N0GG1KB 3/8
"As long as Libya does not return to exporting crude oil it will be difficult for markets to significantly weaken. Run cuts will reduce some demand for crude oil but run cuts are not a long term solution to a supply disruption," said Olivier Jakob, analyst at Petromatrix in Zug.
"We now have to add for this weekend a weather risk as we are starting to get some candidates on the tropical front."
The U.S. National Hurricane Center said that a weather disturbance in the Caribbean had a 50 percent chance of becoming a tropical cyclone in the next 48 hours, potentially affecting oil installations in the Gulf of Mexico.
Marathon oil said on Thursday it was evacuating non-essential staff from its facility in the Gulf of Mexico though production had not been affected so far.