* Libyan refinery shut, airstrike hits oil town
* US crude at Cushing hits record 40.26 million barrels
* Algeria says OPEC would respond to any real shortage
(Recasts, adds new byline, changes dateline from LONDON)
By Gene Ramos
NEW YORK, March 9 (Reuters) - Brent oil prices rose on
Wednesday on intensified fighting in Libya and U.S. prices fell
after data showed crude inventories rose more than expected
last week, widening Brent's premium against U.S. crude.
Brent crude for April delivery <LCOJ1> gained $2.54 to
$115.60 a barrel by 1:16 p.m. EST (1816 GMT), having earlier
hit $116.18.
U.S. April crude <CLJ1> fell 33 cents to $104.69 a barrel,
after hitting an early high of $105.92.
The premium of Brent crude over U.S. benchmark West Texas
Intermediate crude ballooned more than $2 to above $11 a
barrel, after dipping below $7 on Tuesday. <CL-LCO1=R>
Muammar Gaddafi's forces struck an oil pipeline leading to
the Es Sider town and dropped bombs on storage tanks in the Ras
Lanuf oil terminal area in the eastern section of Libya that is
rebel-controlled. []
But Libyan state television blamed the explosions on "al
Qaeda-backed" armed elements.
Gaddafi's forces were closing in on the rebel-held main
square of Zawiyah, where fighting has led to the closure of one
of Libya's biggest refineries.
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Reuters Insider telephone interview with correspondent
Mohammed Abbas on the front line in Libya:
http://link.reuters.com/qys48r
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HIGHER U.S. STOCKPILES
U.S. crude prices weakened after data from the U.S. Energy
Information Administration showed crude inventories rose 2.51
million barrels last week, dwarfing the forecast for an
increase of just 400,000 barrels in a Reuters poll. []
More telling for U.S. crude, crude stocks at the key
delivery hub in Cushing, Oklahoma, soared 1.69 million barrels
to a record 40.26 million barrels.
But losses for U.S. crude were limited as the weekly data
showed drawdowns for gasoline and distillate inventories were
bigger than expected, reflecting improving demand.
PROLONGED STRUGGLE?
Perception of prolonged trouble in Libya was driving the
rally in oil prices, said Christopher Bellew, an oil trader at
Bache Commodities in London.
"As the outlook for Western intervention looks less likely
-- which would bring things to a quick conclusion -- then we
are looking at a prolonged struggle," he said.
About 1 million barrels per day of Libya's output have been
shut by the raging conflict. Libya, a member of the
Organization of the Petroleum Exporting Countries, has a normal
production of 1.6 million bpd.
Libyan oil trade has been paralyzed as banks decline to
clear payments in dollars due to U.S. sanctions, though
Austrian energy group OMV said it had been buying small amounts
of Libyan crude oil and would continue to do so.
NATO Secretary-General Anders Fogh Rasmussen said the
alliance was not looking to intervene in Libya, but its
military was ready to respond at short notice. []
World powers were still considering imposing a no-fly zone
over the Libya, with British Prime Minister David Cameron
seeking international support for any measures to be taken.
Oil prices fell on Tuesday after Kuwait's oil minister said
OPEC was considering raising output due to the Libyan outage.
But an OPEC delegate said on Wednesday that the group saw
no need for an emergency meeting to discuss raising output.
[]
Leading OPEC producer Saudi Arabia is already pumping more
oil -- up to 9 million barrels per day -- to keep supplies
available if needed.
OPEC member Algeria's oil minister, Youcef Yousfi, told an
industry conference in Houston on Wednesday that there was no
shortage of supply, despite the disruptions in Libya, and that
OPEC would respond to any real shortage. []
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FACTBOX on emergency oil stockpiles: []
Graphics on U.S. strategic oil reserve, U.S. and other IEA
nations' reserves: http://link.reuters.com/cah48r
Graphics showing:
Middle East unrest http://r.reuters.com/nym77r
Oil price shocks http://r.reuters.com/qes28r
Those most reliant on oil http://r.reuters.com/dux28r
OECD commercial oil stocks http://link.reuters.com/qyg48r
Brent and WTI open interest http://r.reuters.com/cag48r
Graphic of U.S. oil stocks: http://r.reuters.com/sup48r
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(Additional reporting by Robert Gibbons, David Sheppard and
Janet McGurty in New York; Claire Milhench in London; Alejandro
Barbajosa in Singapore; Editing by Walter Bagley)
