* Frigid weather shuts units at U.S. and Canadian refineries
* Libya armed forces warn oil tankers away from seized ports
* U.S. crude inventories expected to rise in weekly reports
(Adds API data released late Tuesday)
By Elizabeth Dilts
NEW YORK, Jan 7 Oil rose on Tuesday as frigid
weather in North America hurt some refinery operations and
worries grew over Libyan output and fighting in Iraq.
At least five refineries in the U.S. and Canada curtailed
supply after bitterly cold temperatures caused malfunctions and,
in a few cases, full-scale closures.
"The refineries shutting down is the story of the day," said
Joseph Posillico, senior vice president at Jefferies Bache in
Brent crude settled at $107.35, 62 cents higher than
Monday, after settling lower in the previous five sessions,
partly aided by a stronger dollar and higher equity markets.
U.S. crude settled at $93.67, up just over a quarter of a
U.S. RBOB gasoline futures rose 3.45 cents to $2.6805
Crude inventories fell by 7.3 million barrels last week, the
American Petroleum Institute announced Tuesday.
Libya continues to present long term concerns, after the
Libyan navy opened fire on a tanker that approached to load
crude at the seized port of Es Sider. That port, along with
several others has been controlled for several months by
protesters demanding more autonomy from Tripoli.
A group representing the protesters said in a televised
announcement late Tuesday that global oil companies are welcome
to buy oil at this and other ports, and they will insure the
safety of the tankers.
Analysts were pessimistic about the prospect of a further
output recovery after the restart of the major El Sharara
oilfield had led to a drop in prices.
"The market is taking it with a grain of salt that (Libya)
can come through this time," said Gene McGillian, an energy
analyst with Tradition Energy in Stamford, Connecticut.
Production is building up at the 340,000-barrel-per-day
(bpd) El Sharara, which on Tuesday is pumping 277,000 bpd. A
return to full output will more than double Libyan production,
which had fallen to 250,000 bpd from 1.4 million bpd in July.
Marathon Petroleum Corp said its 120,000-bpd Detroit
refinery was experiencing technical difficulties Tuesday because
of the extreme cold. And industry group Genscape reported
reduced activity at the gasoline-making fluid catalytic cracker
of Marathon's 212,000 bpd Catlettsburg, Kentucky refinery.
PBF Energy Inc said it shutdown most processing units at its
160,000 barrel-per-day (bpd) refinery in Paulsboro, New Jersey,
after a loss of steam.
The North Atlantic Come By Chance Refinery in Newfoundland,
Canada, also remained offline because of a local outage, local
media reported. And weather conditions in southern Ontario
prompted Shell Canada to shut one unit at its
75,000-bpd Sarnia refinery for minor repairs.
The glitches were partly offset by expectations of
significantly reduced demand for transport fuels.
"The cold weather isn't helping crude oil trade higher than
people would think because there are so many cancellations with
flights," Baruch said.
Temperatures were forecast to return to normal levels in
Texas and North Dakota by Wednesday leading analysts to believe
the interruptions will be brief.
"I haven't seen anything that's going to cause a huge issue
for them coming back online," Posillico said.
VIOLENCE IN IRAQ
Violence in Iraq and the possibility of increased tensions
ahead of parliamentary elections in April have also sparked
concern about supply from one of the Middle East's largest oil
The Iraqi army deployed tanks and artillery around Falluja
on Tuesday, security officials said, as local leaders in the
besieged city urged al Qaeda-linked militants to leave in order
to avert an impending military assault.
(Additional reporting by Alex Lawler in London and Jacob
Gronholt-Pedersen in Singapore; Editing by William Hardy, David
Gregorio, Paul Simao and Andrew Hay)