(Reuters) - Crude futures edged higher on Tuesday in tug-of-war trading as investors factored increasing concerns about supply disruptions against the likelihood of a release of strategic oil reserves to cap rising fuel costs.
Prices for both U.S. and Brent crude edged higher on reports of production problems in the North Sea and South Sudan. This added to persistent fears about potential disruption of supply from Iran as Tehran and the West spar over the OPEC nation's nuclear program.
Crude prices turned negative after a Bloomberg report quoted Charles McConnell, assistant secretary for fossil energy at the U.S. Energy Department, as saying a release from reserves "is being considered."
A U.S. government official told Reuters the Obama administration had not changed its stance on tapping the reserves or other options under consideration to help cool fuel prices.
U.S. crude stocks rose 3.6 million barrels last week, the American Petroleum Institute (API) said in a weekly report released after crude prices settled on Tuesday. The increase was more than expected.
Gasoline inventories rose 1.3 million barrels and distillate stocks fell 1.4 million barrels, the API said.
Crude stocks were expected to have increased last week, but only by 2.6 million barrels, according to a Reuters survey of analysts ahead of the weekly inventory reports.
Distillate stocks were expected to be near flat, down only 100,000 barrels, and gasoline stocks down 1.3 million barrels, the survey showed.
FUNDAMENTALS
* On the New York Mercantile Exchange, May crude rose 30 cents, or 0.28 percent, to settle at $107.33 a barrel, having traded from $106.52 to $107.73. Prices dipped in post-settlement trading after the API data.
* U.S. single-family home prices were unchanged in January, suggesting the battered housing market continues to crawl along the bottom, the S&P Case-Shiller survey said.
* Enbridge Inc (ENB.TO) and Enterprise Products Partners LP (EPD.N) will more than double the capacity of the Seaway Pipeline, adding 450,000 barrels per day (bpd) of capacity to the Seaway system and raising its capacity to 850,000 bpd by mid-2014.
* Enbridge also plans to increase the size of its Flanagan South Pipeline from Flanagan, Illinois to Cushing, Oklahoma, to a 36-inch diameter line with an initial capacity of 585,000 bpd.
* India's local oil product sales in February rose an annual 7.3 percent, highest since November, as growth in demand for industrial fuels surged during the month, government data showed. Oil product sales, a proxy for oil demand, totaled 12.34 million tonnes in February.
MARKETS NEWS
* U.S. stocks retreated from near four-year peaks, while a batch of large-cap shares hit new highs, with the help of portfolio managers snapping up top performers near the end of the quarter. .N
* London copper prices ended modestly higher in thinner conditions, failing to build strongly on the prior day's 2-percent rally, as worries about slowing Chinese demand continued to cap bullish sentiment.
UPCOMING DATA/EVENTS
* U.S. Energy Information Administration oil inventory data due at 10:30 a.m. EDT (1430 GMT) on Wednesday.
* U.S. initial jobless claims weekly data due at 8:30 a.m. EDT (1230 GMT) on Thursday.
* U.S. Energy Information Administration natural gas storage data due at 10:30 a.m. EDT (1430 GMT) on Thursday.
SETTLE NET PCT LOW HIGH CURRENT DAY AGO
CHNG CHNG VOL VOL CLc1 107.33 0.30 0.3% 106.52 107.73 196,511 162,276 CLc2 107.85 0.30 0.3% 107.03 108.22 50,298 41,171 LCOc1 125.54 -0.11 -0.1% 124.91 126.18 199,660 128,771 RBc1 3.4056 -0.0110 -0.3% 3.3870 3.4189 18,972 33,183 RBc2 3.3864 -0.0123 -0.4% 3.3689 3.3999 48,107 48,771 HOc1 3.2186 -0.0102 -0.3% 3.2030 3.236 18,814 38,818 HOc2 3.2360 -0.0105 -0.3% 3.2196 3.2526 46,792 55,415
TOTAL MARKET VOLUME OPEN INTEREST
CURRENT Mar 26 30D AVG Mar 26 NET CHNG
CRUDE 381,642 279,275 652,725 1,549,905 1,757
RBOB 132,790 142,811 143,998 380,676 -4,991
HO 116,973 142,809 142,045 290,696 -714
