* U.S. gasoline falls after Monday's Memorial Day holiday
* New Ukraine leader says no talks with "terrorists"
* Libya oil output 160,000 bpd vs 1.4 million pre-uprising
* Cushing stocks seen falling -analysts
* Crude stocks seen rising 700,000 barrels -Reuters
(Rewrites throughout, updates prices, adds analyst commentary)
By Elizabeth Dilts
NEW YORK, May 27 Crude oil futures edged lower
on Tuesday as traders took profit after a long holiday weekend,
with prices supported by violence in Ukraine and expectations
for a draw on U.S. crude stocks at the Cushing, Oklahoma hub.
Gasoline prices fell nearly 3 percent as traders dumped long
positions taken before Monday's Memorial Day holiday in the
U.S., which marked the start of the summer driving season.
The tumble pulled Brent and U.S. crude lower, with Brent
settling 30 cents down at $110.02 a barrel. U.S. light
crude oil settled 24 cents lower at $104.11 a barrel.
U.S. gasoline fell 2.8 cents to $2.9952 a gallon.
Still, heightened geopolitical risk in Libya and Ukraine has
helped Brent gain more than 6 percent since early April. U.S.
crude has gained nearly 6 percent in the month of May.
Libyan protesters blockading oil ports since last summer
have caused exports to dwindle to about one-tenth of capacity.
Conflict in eastern Ukraine, a main gas supply route to Europe
from Russia, continued to worry investors that the violence
could disrupt oil supplies as well.
Also supportive, U.S. commercial crude stocks were expected
to have fallen further last week at the delivery point for U.S.
crude futures at Cushing, analysts said, though a Reuters poll
found overall crude stocks were seen as rising 700,000 barrels.
Weekly inventory will be released one day late due to the
holiday on Monday. The American Petroleum Institute will release
its report Wednesday at 4:30 p.m. EDT (2030 GMT), followed by
the U.S. Energy Information Administration's report on Thursday
at 11:00 a.m. EDT (1500 GMT).
"We saw a bit of a drop off in the RBOB (U.S. gasoline) as
we got past Memorial Day," said Phil Flynn, analyst at Price
Futures Group in Chicago. "U.S crude wants to start breaking
down (in price) but it isn't doing it yet."
"There is probably $10-$12 of risk premium in the price
because there is so much uncertainty across the world. We are
staying elevated because Cushing inventories are so low."
In Libya, new protests slowed work at Hariga port causing
the OPEC producer's output to fall to 160,000 barrels per day
(bpd), versus the 1.4 million bpd produced before the 2011
uprising against Muammar Gaddafi.
The leader of rebel groups said he did not recognize the new
Libyan prime minister's government and indicated a deal reached
previously to end his blockade could be in jeopardy.
Ukrainian aircraft and paratroopers killed more than 50
pro-Russian rebels in an assault on the eastern city of Donetsk
that raged into a second day after a newly elected president
vowed to crush the revolt in the east once and for all.
(Additional reporting by Christopher Johnson in London and
Manash Goswami in Singapore; Editing by David Evans, Bernadette
Baum and Marguerita Choy)