* US oil trading on track for lowest volume day of 2011
* Libyan rebels regain control of some oil facilities
* Qatar first Arab nation to recognize Libya rebels
(Recasts, updates prices, market activity, new byline, changes
dateline, previously LONDON)
By Joshua Schneyer
NEW YORK, March 28 (Reuters) - Brent was flat and U.S. oil
pared losses on Monday in the weakest trading volume this year,
with traders awaiting further evidence that Libya could resume
crippled oil exports after rebels regained key territory.
A weaker U.S. dollar <.DXY> and upbeat U.S. pending home
sales pulled oil prices back from earlier losses. Growing
speculation that the European Central Bank will raise interest
rates as early as next month supported the euro.
Brent crude futures for May delivery <LCOc1> traded
unchanged at $115.59 a barrel by 1:46 p.m. EDT (1746 GMT),
after bouncing off an earlier $114.55 low.
U.S. May crude futures <CLc1> fell for a third day, losing
63 cents to $104.77 a barrel, after dipping as low as $103.60.
Brent's premium to the U.S. benchmark <CL-LCO1=R> rose 43 cents
to $10.85 a barrel, staking out a range after narrowing from
its March 1 record above $17.
But with uncertainty running high amid Middle East unrest,
a nuclear crisis in quake-hit Japan and unsure economic
prospects for a debt-laden euro zone, the most notable aspect
of Monday's oil trade was paltry volume.
With only a half-hour of regular trade to go, total U.S.
crude volume was tracking two-thirds below the 30-day average
and headed for the lightest volume of the year. Brent trading
volume was 55 percent below the 30-day average, according to
Reuters data.
"The low trading volumes have continued from last week with
a high level of indecision in oil markets," said John Kilduff
of New York hedge fund Again Capital.
"Uncertainty about supplies from the Middle East is
counterbalanced with the potential for demand destruction in
Japan following the earthquake. The big momentum players are
getting sidelined."
ECONOMIC DATA, LIBYAN REBELS
The U.S. National Association of Realtors said on Monday
its Pending Home Sales Index, based on contracts signed in
February, unexpectedly rose 2.1 percent, potentially boosting
the outlook a U.S. economic recovery.[]
But Japan's woes and Europe's murky economic outlook have
dampened bullishness about growth in oil demand.
"Europe remains a concern with Portugal, Ireland and Greece
all contributing to a negative economic picture," said Matt
Simmons at Summit Energy in Louisville, Kentucky.
In OPEC producer Libya, rebels backed by Western air
strikes advanced their position over the weekend, regaining
control of key oil ports. []
A U.S. Treasury official said that rebels could sell Libyan
crude free from sanctions imposed against transactions with the
government of Colonel Muammar Gaddafi.
Middle East Gulf country Qatar, which has backed the Libyan
rebels, has agreed to help them sell Libyan crude. But rebel
leaders, oil traders and analysts say those developments
probably won't lead to a quick resumption of oil shipments from
Libya, which have plunged to a fraction of their normal 1.5
million barrels a day.
Ongoing fighting and concerns over U.S. and United Nations
sanctions are likely to keep crimping Libya's output, they
said. []
"Qatar's help and rebel gains in theory could quicken
Libya's efforts to resume oil shipments, but there are still a
lot of logistics problems," said Smith.
"A lot of the workers that operate Libya's oil industry
have left."
The United Arab Emirates said Monday it has "stepped in" to
help make up for lost output from Libya, and acknowledged that
other OPEC producers have done the same by unilaterally
boosting output, including Saudi Arabia, Kuwait and Angola.
(Additional reporting by Robert Gibbons in New York, Claire
Milhench in London and Alejandro Barbajosa in Singapore;
Editing by Marguerita Choy and David Gregorio)
