| NEW YORK
NEW YORK Brent March crude edged up at the contract expiration on Tuesday, while nearby Brent and U.S. crude prices dipped, as investors weighed potential supply threats in a tense Middle East and persistent concerns about the euro zone economy.
U.S. crude losses were limited by news that Canadian Natural Resources Ltd's (CNQ.TO) Horizon oil sands processor would be shut until mid- to late March, longer than initially expected, reducing supplies to the United States.
Brent's expiring front-month March crude rose 23 cents to settle at $118.16 a barrel, after swinging from $117 to $118.28. April Brent fell 4 cents to settle at $117.35, having traded from $116.53 to $117.80.
"Book squaring on the March Brent contract ahead of today's expiration was (a) feature of the trade," Tim Evans, energy analyst for Citi Futures Perspective, said in a note.
U.S. March crude fell 17 cents to settle at $100.74 a barrel, having traded from $100.28 to $101.84.
Brent's premium to U.S. crude also had a tug-of-war trajectory, dropping briefly below $16 a barrel, before recovering and ending at $17.42 based on settlements.
Total U.S. crude trading volume was 26 percent above the 30-day average, while Brent volume lagged and was 5.5 percent under its 30-day average.
U.S. gasoline futures fell 1 percent, or 3 cents, pressured ahead of weekly inventory reports expected to show stockpiles rose last week and continuing weak demand. U.S. heating oil managed a 0.15 percent gain.
U.S. retail gasoline demand fell 3.1 percent last week from the previous week and was down 5.4 percent versus the year-ago period as the retail price of the fuel rose across the nation, MasterCard said in a weekly report.
U.S. OIL INVENTORIES
U.S. crude inventories rose 2.9 million barrels last week, the industry group American Petroleum Institute said in a report released during post-settlement trading on Tuesday, a bigger build than expected. <API/S>
Gasoline stocks rose 1.8 million barrels, while distillate stockpiles fell 2.2 million barrels, with a drop in heating oil stocks making up 1.3 million barrels of the decline, the API report said.
U.S. crude stocks were expected to be up 1.5 million barrels, according to a Reuters survey of analysts ahead of weekly inventory reports.
Gasoline stocks are expected to be up 800,000 barrels, with distillate stockpiles seen down 1.1 million barrels, the survey showed.
The U.S. Energy Information Administration's inventory report is slated for release at 10:30 a.m. EST (1530 GMT) on Wednesday.
MIXED ECONOMIC DATA
"There is mixed data, and Brent looks a bit bearish today, but the oil price is holding relatively well despite the supply/demand balance looking a bit softer, with the Iran issue at the back of our heads," said Andy Sommer, at EGL in Dietikon, Switzerland.
Rating agency Moody's warned late on Monday it may cut the triple-A ratings of France, Britain and Austria and downgraded six other European nations, helping keep concerns about euro zone demand for oil in focus.
German analyst and investor sentiment leapt to its highest level in 10 months in February, but any lift for oil prices was limited by other European data showing output at euro-zone factories tumbled in December and Portugal's recession deepening in the last quarter of 2011.
U.S. retail sales rose less than expected in January, though a separate report showed confidence among U.S. business owners hit a four-year high in January, but Wall Street fell on the disappointing retail sales report. .N
IRAN AND MIDDLE EAST TURMOIL
Oil prices remain underpinned by tensions surrounding Iran's dispute with the West over Tehran's nuclear program and the accelerating turmoil in Syria.
Saudi Arabia has offered additional crude supplies to India, the Indian government said as its defense minister visited Riyadh to discuss defense cooperation and as Indian and other refiners consider alternatives as sanctions on Iran tighten.
Israel on Monday accused Iran and its Lebanese ally Hezbollah of being behind two bomb attacks that targeted Israeli embassy staff in India and Georgia.
On Tuesday, an Iranian man was seriously wounded in Bangkok when a bomb he was carrying exploded, police and government officials said, though they declined to speculate on whether he was involved with any military group.
Government forces and opponents of President Bashar al-Assad clashed across Syria on Tuesday and Arab officials confirmed that regional governments would be ready to arm the resistance if the bloodshed did not cease.
(Additional reporting by Gene Ramos in New York, Claire Milhench and Yeganeh Torbati in London and Jessica Jaganathan in Singapore; Editing by Marguerita Choy and Lisa Shumaker)