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* U.S. gasoline extends gains to near 15 percent for July
* Coming Up: U.S. API weekly crude stocks; 2030 GMT (Adds API inventory report details)
By Nicolas Medina Mora Perez
NEW YORK, July 16 (Reuters) - Brent crude edged higher on Tuesday as U.S. gasoline surged to four-month highs due to refinery problems during summer driving season and rising prices for ethanol credits.
A spate of refinery outages across the United States over the past week has helped push U.S. RBOB gasoline futures up nearly 15 percent so far in July, while government data showed demand rising faster than expected.
North Atlantic Refining confirmed it was in the midst of repairs at a sulphur recovery unit at its 115,000 barrel per day Come By Chance refinery in Newfoundland, Canada, which were expected to be completed early next week.
Traders said gasoline prices also got a lift from a spike in prices for ethanol credits, required by companies who make gasoline for U.S. consumption to comply with mandated renewable fuels requirements.
Prices for the credits have surged 30 cents this month and were trading above $1.30 a gallon on Tuesday due to concerns about a potential shortfall this year.
"Gasoline continues to move higher, it doesn't look like it has lost momentum, and I think we have probably further advances in front of us, though it does look vulnerable to a correction," said Gene McGillian, analyst, Tradition Energy in Stamford, Connecticut.
Since July 10, the front-month RBOB gasoline futures contract has traded over 70 on the relative strength index, a sign technicians say indicates a commodity may be overbought.
RBOB gasoline futures rose more than 3 cents to settle at $3.1343 a gallon, the highest settlement since March 15.
Brent crude for August traded up 31 cents to settle at $109.40 a barrel, the highest settlement since April 2.
U.S. crude oil closed down 32 cents at $106.00 a barrel. The decline brought it back near 70 on the relative strength index. The front month contract has been trading at or above 70 since July 5.
Brent's premium to U.S. crude CL-LCO1=R traded as low as $2.32 a barrel, before swinging back out to $3.40 a barrel at the settlement.
Trading volumes were light, with U.S. crude 18 percent below its 30-day average near 3:30 p.m. EDT (1930 GMT). Brent volumes were about 15 percent below that average.
Traders waiting for U.S. weekly inventory data. A Reuters poll of analysts forecast a 2 million-barrel drop in crude inventories for the week to July 12, while gasoline stockpiles were seen down 500,000 barrels.
Data from the American Petroleum Institute showed U.S. crude oil inventories fell by 2.6 million barrels last week, while stockpiles at Cushing, Oklahoma declined by 880,000 barrels.
Gasoline stockpiles rose by 2.6 million barrels in the week to July 12, according to the API. The market will now await data from the same week from the U.S. Energy Information Administration due out on Wednesday at 10:30 a.m. EDT (1430 GMT). (Additional reporting by Matthew Robinson in New York; Simon Falush in London; and Manash Goswami in Singapore; Editing by Chris Reese, Marguerita Choy and David Gregorio)