Brent up on Egypt uncertainty and U.S. crude dips

NEW YORK (Reuters) - Brent crude prices rose to near $100 a barrel on Tuesday as Egypt's political turmoil kept alive concerns about potential supply interruptions, while U.S. crude prices edged lower after a volatile session.

Egyptians staged one of their biggest protests yet, demanding President Hosni Mubarak step down now, their intent undiminished by the vice president's announcement of a plan to transfer power.

Crude oil prices on both sides of the Atlantic bounced after being pressured early when China moved to tame inflation with an interest rate increase, the second in just over six weeks, that revived concern about oil demand growth easing.

U.S. crude futures were lifted intraday on crude supply disruptions in the United States and Colombia and as gasoline futures rallied on refinery outages.

In London, ICE Brent crude for March rose 67 cents to settle at $99.92 a barrel, having reached $100.42.

U.S. crude oil for March delivery fell 54 cents to settle at $86.94 a barrel.

Even with the price volatility, Brent's premium against U.S. benchmark West Texas Intermediate crude hit a record high above $13 a barrel, surpassing the previous record of $12.72 from January 16, 2009, according to Reuters data.

"It doesn't look like the unrest in Egypt is going away any time soon," said Mark Waggoner, president at Excel Futures Inc in Bend, Oregon.

Strikes by workers at companies in the Suez Canal zone will not affect the canal operations and movement of ships, a senior canal official told Reuters, but the worker dissatisfaction reinforced the remaining potential for the region's unrest to cause oil supply disruptions.

Saudi Arabia increased production in November and December, according to a report from the U.S. Energy Information Administration, which added to price volatility and helped cool U.S. crude prices, analysts and brokers said.

U.S. gasoline futures rose nearly 2 percent, getting lift from news that Valero Energy Corp (VLO.N) shut down a gasoline-making unit at its 287,000 barrels-per-day refinery in Port Arthur, Texas.

"Although China's rate hikes appeared to set the stage for a weak session early this morning, the product markets recovered on reports of refinery issues," Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois, said in a note.

Gasoline futures rose, despite U.S. retail gasoline demand slumping as a massive snowstorm curbed demand.

API REPORTS CRUDE STOCKS RISE

Domestic U.S. crude oil inventories rose 558,000 barrels last week as imports fell 1.1 million barrels per day, the industry group American Petroleum Institute said late on Tuesday, against expectations stockpiles rose.

Gasoline stocks rose 3.2 million barrels, more than forecast, and distillate stocks fell only 538,000 barrels, less than expected, the API said.

Ahead of the API report, a Reuters survey of analysts yielded a forecast for crude stocks to have risen for a fourth consecutive week, by 2.4 million barrels.

Distillate stocks, including heating oil and diesel fuel, were forecast to have fallen 1.2 million barrels and gasoline stocks were expected to be up 2.5 million barrels.

U.S. crude pared losses after the API report's release.

The U.S. EIA's weekly inventory data is set for release at 10:30 a.m. EST (1530 GMT) on Wednesday.

CHINA INTEREST RATE HIKE

Crude oil prices on both sides of the Atlantic fell intraday after China moved to tame inflation with an interest rate increase, the second in just over six weeks.

Copper prices also slumped on the news before ending firmer as investors decided Chinese demand for oil and industrial metals would continue despite the efforts of the government to cool stubborn inflation.

(Additional reporting by Gene Ramos and Matthew Robinson in New York and Zaida Espana in London; Editing by David Gregorio)