Oil prices jumped to their highest close in 2-1/2 years on Thursday in thin end-of-quarter trading that left Brent near a record quarterly rise of more than $22 as Libya's conflict and Middle East unrest kept supply threats in focus and U.S. economic data added lift.

Oil remained supported by geopolitical supply risks and signs of economic growth after the most volatile quarter for the oil market since the end of 2008, analysts said.

Prices built on early gains after a report that U.S. jobless claims fell last week and data pointing to improving Midwest employment, all coming ahead of the closely watched March nonfarm payrolls report due on Friday.

End of quarter positioning and today's jobless figures again surprised on the favorable side with further economic optimism likely to be on display tomorrow morning, Jim Ritterbusch, president at Ritterbusch & Associates said in a note.

Brent crude for May rose $2.23 to settle at $117.36 a barrel, highest close since August 2008 and up 23.9 percent for the quarter.

Brent reached $117.70 intraday on Thursday, leaving May Brent's $118.42 contract high ahead of the front-month 2-1/2-year intraday peak near $120 struck on February 24.

Brent's recovery comes after it fell below $108 in the aftermath of Japan's March 11 earthquake and tsunami.

U.S. crude rose $2.45 to settle at $106.72, highest close since September 2008, and jumping 16.8 percent for the quarter.

Prices rose to $106.83 intraday, close to the March 7 peak of $106.95 that is the highest intraday price since 2008.

Crude bounced off $102.70 (on Tuesday), finding support there, and Libya looks like it will be shut for awhile and with the Middle East and improving economic data the market is looking for a catalyst to take out the 2011 high, said Gene McGillian, analyst, Tradition Energy in Stamford, Connecticut.

Trading volumes remained tepid, well below 30-day averages for both Brent and U.S. crude.

CONFLICT IN LIBYA

Investors' belief that a protracted conflict in Libya will keep exports shut off was reinforced as forces loyal to Muammar Gaddafi took back oil ports at Ras Lanuf and Brega. Rebels readying a counter-attack were both encouraged by and wary of news of covert U.S. support and the defection of Gaddafi's foreign minister.

Libya's top oil official Shokri Ghanem said from Tripoli that the country was continuing to produce some oil, although output was much reduced.

MIDDLE EAST UNREST

Investors also eyed Bahrain, where dozens were missing and more than 300 were detained after a crackdown targeting activists and Shi'ites, the opposition said.

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.

The conclusion of Friday prayers has been a favored time for protests in the region.

Protests and unrest in Syria and Yemen have also been part of the geopolitical risk premium.

(Additional reporting by Jessica Donati, Nia Williams, Claire Milhench in London and Alejandro Barbajosa in Singapore; Editing by Marguerita Choy and David Gregorio)

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