* Libyan navy opens fire as crude tanker approaches
* Severe cold weather threatens to curtail oil production in
the United States
* U.S. crude stocks seen rising last week
By Jacob Gronholt-Pedersen
SINGAPORE, Jan 7 Brent oil futures climbed above
$107 a barrel on Tuesday after five consecutive sessions of
losses, as investors weighed mixed signals from Libya and cold
weather across the central United States threatened production.
In an escalation of the conflict in Libya, the navy opened
fire on Monday after an oil tanker approached to illegally load
crude at a port controlled by rebels. The episode came after the
country over the weekend restarted production at a major oil
Brent crude for February delivery rose 48 cents to
$107.21 at 0259 GMT, after having settled lower in the previous
five sessions, partly on expectations of rising Libyan exports.
U.S. crude was 25 cents higher at $93.68 a barrel.
The contract has also fallen in the past five sessions and
settled 53 cents lower on Monday.
"I think the restart of production (at El Sharara) is priced
in by now. Maybe it's even overshot to the downside," said Tony
Nunan, oil risk manager at Mitsubishi Corp. in Tokyo.
The restart of the 340,000-barrel-per-day (bpd) El Sharara
field will more than double Libyan crude production, which had
fallen to 250,000 bpd from 1.4 million bpd in July.
While expectations of more Libyan supply have helped push
prices lower, an escalation of months-long civil unrest in the
African country could provide a floor under the market.
"This just shows that the trouble in the Middle East and
North Africa is a chronic problem that's going to take years to
solve," said Nunan.
"I think Brent will stay in triple digits as long as we have
this instability in the region."
Oil prices were also supported by severe cold weather
sweeping across the central United States that threatens to
curtail some oil production as wells were stranded and drilling
and fracking operations were interrupted.
Still, as of late Monday, major U.S. oil producers had only
reported minor effects on their operations. Temperatures were
forecast to swing back to normal levels in Texas and North
Dakota by Wednesday.
Next week, trading will begin for crude oil loading in
March, when a drop in demand can be expected as refiners in the
United States and elsewhere enter spring maintenance.
"We have probably already passed the peak in winter crude
purchases. I think the situation in Libya, Fed tapering and a
stronger dollar doesn't bode well for crude prices," said Nunan.
U.S. commercial crude oil inventories likely rose 2.2
million barrels in the week ended Jan. 3 after near-record
five-week declines, a preliminary Reuters poll of analysts
showed on Monday.
In the previous five weeks, U.S. crude stocks fell by more
than 30 million barrels - the biggest such decline since 1990 -
as Gulf Coast refiners drew down stocks to minimize year-end
taxes. Distillate stocks rose sharply last week.
OPEC's oil output averaged 29.53 million barrels per day in
December, falling to the lowest since May 2011, a Reuters survey
found, due to strikes and protests in Libya, stagnation in Iraqi
exports and a further reduction in Saudi Arabian supply.
(Editing by Richard Pullin)