* Libyan navy opens fire as crude tanker approaches
* Freezing weather threatens to curtail U.S. oil production
* U.S. crude stocks seen rising last week
(Adds detail, comment; updates prices)
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 as
cold weather across the central United States threatened
In an escalation of the conflict in Libya, the navy opened
fire on Monday after an oil tanker approached to load crude
illegally at a port controlled by rebels. The episode came after
the country over the weekend restarted production at a major
Brent crude for February delivery had gained 54
cents to $107.27 by 0659 GMT, after settling lower in the
previous five sessions, partly on expectations of rising Libyan
U.S. crude was 22 cents higher at $93.65 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 put 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."
The recent wave of violence in Iraq and the possibility of
increased tensions ahead of parliamentary elections in April
have also sparked concern about supply from this key oil
U.S. Vice President Joe Biden spoke with Iraqi Prime
Minister Nuri al-Maliki on Monday to express support for Iraq's
fight against al Qaeda-linked militants.
"Iraq's energy infrastructure thus far has been largely
shielded from the recent surge in violence, but the risks to the
oil sector are rising," analysts at Barclays said in a note.
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 a near-record
five-week decline, a preliminary Reuters poll of analysts showed
Over 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.
(Editing by Tom Hogue and Joseph Radford)