UPDATE 5-Oil up at Jan expiry on strong gasoline, cold weather

                                
 * Gasoline futures spike on tight supply picture, demand
                                
 * Cold weather in Europe, U.S. to provides support
                                
 * U.S. Jan crude contract expired on Monday
                                
 * Coming up: API oil inventory data, 4:30 p.m. EST Tuesday
 (Recasts, updates with settlement prices, market activity)
                                
 By Robert Gibbons
                                
 NEW YORK, Dec 20 (Reuters) - Oil prices rose a second
straight session on Monday, lifted by strong gasoline futures
ahead of expected holiday demand and also by cold weather,
which supported heating oil futures.
                                
 Volume was thin and trading was choppy. The expiring U.S.
January crude contract was not able to break above $90 a
barrel, having reached a 26-month high of $90.76 on Dec. 7.
                                
 Oil investors shrugged off the stronger dollar and ongoing
concerns about euro zone debt woes.
                                
 U.S. gasoline futures <RBc1> surged to their highest level
since May on hopes that holiday driving will boost demand and
because a closed spot arbitrage window to ship supply from
Europe will make fewer imports available.[ID:nLDE6BJ1S8]
                                
 Traders also cited recent refinery snags and supply
tightness in the New York Harbor.
                                
 The expiring U.S. January contract <CLF1> rose 79 cents to
settle at $88.81 a barrel, having seesawed between $87.26 and
$88.98.
                                
 Crude prices reached a 26-month high of $90.76 on Dec. 7.
                                
 U.S. crude for February delivery <CLG1> rose 77 cents to
settle at $89.37, having traded from $87.73 to $89.57.
                                
 "Nearby crude futures were propped up by a strong gasoline
trade and a moderate recovery in the equities but gravitation
within the $88-89 area remained intact," Jim Ritterbusch,
president at Ritterbusch & Associates in Galena, Illinois, said
in a note.
                                
 Monday's total U.S. crude futures trading volume was at
509,184 lots with about an hour and a half left in
post-settlement trading, still 24 percent below the 30-day
average.
                                
 ICE Brent crude for February <LCOc1> rose $1.07 to $92.74 a
barrel, also in choppy trading.
                                
 Also helping lift crude oil prices was news of a shut
pipeline in Nigeria amid more militant activity and tensions on
the Korean peninsula also lurked as a supportive factor.
                                
 "The global risks for the holidays are not small. The
Koreans keep on provoking each other, there is still a risk of
further tightening measures from China and Europe remains full
of surprise with its peripheries and their bond yields," said
Olivier Jakob of Petromatrix.
                                
 North Korea said it would not react to military drills by
South Korea on Monday, despite an earlier threat to retaliate.
[ID:nL3E6NK01M]
                                
 U.S.-based Chevron <CVX.N> said on Monday it had suspended
production from an oil pipeline in Nigeria's Delta state
[ID:nLDE6BJ0BX], although Royal Dutch Shell <RDSa.L> said it
had ended a one-month force majeure in Nigeria after repairing
a pipeline. [ID:nLDE6BJ1EM]
                                
 Capital flows into China slowed in November from a near
record high in October, central bank data showed, which could
reduce the need for an imminent tightening of monetary policy.
[ID:nL3E6NK06O] Oil and other commodities investors eye China's
efforts to cool inflation because China has been the major
source of demand growth.
                                
 Limiting oil's price rise as year-end trading approaches
was investor caution fueled by the continuing concerns about
euro zone debt woes. The dollar index <.DXY> strengthened and
the euro fell after ratings agency Moody's said it may cut the
ratings on some Spanish banks. [USD/]
                                
 A stronger dollar can pressure dollar-denominated oil
prices as it raises the value of dollars paid to producers and
raises oil prices in markets using other currencies.
                                
 COLD WEATHER SUPPORTS
                                
 Snow and frigid temperatures caused disruption across
northern Europe for a third day, stranding travelers, snarling
traffic and shutting schools, and the bad weather is likely to
continue through the week. [ID:nLDE6BJ0JD]
                                
 While total U.S. heating demand was expected to be 2.1
percent below normal this week, heating oil demand was forecast
to be 4.6 percent above normal, according to the U.S. National
Weather Service. [ID:nSGE6BJ05E]
                                
 Weekly oil inventory reports were expected to show crude
oil and distillate stocks fell last week, though gasoline
stockpiles were estimated to have risen, according to a Reuters
survey of analysts on Monday. [EIA/S]
                                
 U.S. oil inventory data from the American Petroleum
Institute is due late Tuesday afternoon, with the government's
report following on Wednesday morning.
 (Additional reporting by Gene Ramos in New York and Dmitry
Zhdannikov in London; Editing by David Gregorio)