* Refinery problems boost US gasoline
* Libya oil exports to exceed pre-war, weighs on oil
* Coming up: U.S. April crude contract expiry Tuesday (Recasts, updates prices to settlement, adds analyst comment)
By Robert Gibbons
NEW YORK, March 19 Brent crude prices edged lower on M onday on rising output from Saudi Arabia and Libya, while refinery problems helped push U.S. crude higher.
U.S. gasoline prices rose 1 percent after a fire hit PBF Energy's Delaware City, Delaware refinery, adding to concerns about fuel supplies in the Atlantic Basin where several plants have been shut due to poor margins over the past year.
In addition, Valero announced it will shut down its 235,000 barrel per day (bpd) Aruba refinery, further tightening regional supplies ahead of the U.S. summer driving season.
International benchmark Brent crude dipped however, on news that top exporter Saudi Arabia boosted oil exports in January and that Libyan oil production would return to levels last seen before the civil war in April.
Further support for U.S. crude came as the S&P 500 stock index extended recent gains on Wall Street to climb within 10 percent of its record closing high from October 2007 on Apple Inc's announced return of a dividend and the recent stream of upbeat U.S. economic data.
"Support off of broad based macroeconomic factors was again in evidence as the U.S. stock market is adding to recent gains and the euro was able to push higher," Jim Ritterbusch, president at Ritterbusch & Associates, said in a note.
Brent May crude fell 10 cents to settle at $125.71. It fell intraday to $124.82, finding support just below the 10-day moving average of $124.88.
U.S. April crude rose $1.03 to settle at $108.09 a barrel, having swung from $106.55 to $108.24, testing below the 20-day moving average of $106.85 intraday.
The April contract expires at the end of Tuesday's session. U.S. May crude gained 98 cents to settle at $108.56.
Brent's premium to U.S. crude CL-LCO1=R narrowed to end at $17.15 a barrel, based on May contract settlements.
Total crude trading volumes were light, with both Brent and U.S. turnover well under their respective 30-day averages during post-settlement trading.
IRAN AND ALTERNATIVE SUPPLY
Concerns about the standoff between the West and Iran over Tehran's nuclear program have lifted oil prices this year and kept oil markets on edge. Iran has agreed to a new round of talks with the West, but Western sanctions aimed at curtailing Tehran's nuclear ambitions have hit oil exports.
"Iran as a supply risk is supporting prices and weaker demand, rising production and physical oversupply is weighing on prices, so it is keeping prices rather stable in this narrow range," said Carsten Fritsch, commodity analyst at Commerzbank.
The return of Libya's exports after disruptions caused by the civil war, as well the increased supply from Saudi Arabia could help to calm markets on edge about replacing Iranian barrels.
Libya plans to export almost 1.4 million bpd of crude oil in April, a senior National Oil Corp official said, exceeding deliveries in February 2011 before the uprising that ousted Muammar Gaddafi.
Saudi Arabia's oil exports rose 143,000 barrels bpd in January month-on-month, according to government data published Sunday, while total production rose 61,000 bpd to 9.871 million bpd in January. The kingdom has insisted it can replace any lost Iranian supplies.
Addressing any threat of interrupted oil tanker traffic in the Strait of Hormuz if the West's dispute with Iran erupts, Iraq has approved a plan to expand its oil export routes by adding capacity from its northern fields and building a pipeline to ship oil from southern fields to Turkey. (Additional reporting by Gene Ramos in New York, Drazen Jorgic in London and Francis Kan in Singapore; Editing by Bob Burgdorfer)