* Libyan national output could hit 600,000 bpd
* Slowing Chinese economy drags
* Bitter U.S. winter could hit demand, output
(Updates prices to settlement)
By Anna Louie Sussman
NEW YORK, Jan 6 Oil prices seesawed on Monday,
ending the session slightly lower, as traders weighed reports of
production resuming at a Libyan oilfield against new threats to
shipments from a port controlled by protesters.
Brent and U.S. crude dipped on a day of mixed messages,
including a shipping drama off Libya's shore and a deep freeze
across the United States that threatens to disrupt oil
production but also curtail demand.
In an apparent escalation of the months-long civil unrest in
Libya, the country's armed forces warned they would not allow
any oil tanker to load at ports seized by protesters. The Libyan
Navy had blocked a Maltese-flagged vessel from trying to reach a
dock and opened fire as it approached the port of Es Sider,
The price volatility followed Brent's biggest weekly fall in
six months after the restart of the El Sharara oilfield
following a two-month blockade by protesters.
The restart of the 340,000-barrel-per-day (bpd) field will
more than double Libyan crude production, which had fallen to
250,000 bpd from 1.4 million bpd in July.
"We're still seeing most of the geopolitical risk hitting
Brent, whether it be Libya or Iraq," said Phil Flynn, analyst at
the Price Futures Group in Chicago.
On Monday, Iraq's prime minister urged people in the
besieged city of Falluja to drive out al Qaeda-linked insurgents
to pre-empt a military offensive that officials said could be
launched within days.
U.S. crude futures extended losses for a fifth straight
session, with traders citing ample domestic supplies of crude
"I think it's a storage issue. There's a lot of crude oil
out there," said Bob Yawger, director of commodities futures at
Mizuho Securities in New York.
"You're getting a fading sense of support from equities. It
shows there a certain degree of skepticism as far as the risk
assets are concerned."
Brent crude futures for February ended lower for the
fifth straight session, losing 16 cents to settle at $106.73,
after earlier climbing over $1 to a session high of $107.96. The
international benchmark recovered in post-settlement trading, up
18 cents to $107.07 by 3:14 p.m. EST (2014 GMT)
U.S. crude fell 53 cents to settle at $93.43 per
barrel. The contract lost $1.48 a barrel on Friday and posted
its biggest weekly drop since June 2012.
Energy markets kept an eye on the weather in North America,
where Midwestern states experienced the lowest temperatures in
two decades and forecasters said life-threatening cold was
The severe cold weather is threatening to curtail booming
oil production as it disrupts traffic, strands wells and
interrupts drilling and fracking operations.
Snow, ice and the sharp cold can limit gasoline demand and
disrupt oil production and refining but also boost consumption
of middle distillates such as heating oil.
Concerns over slowing growth in China put the brakes on
gains in oil and other commodities.
Growth in China's services sector fell to a four-month low
in December as business expectations dropped, a government
survey showed, adding to evidence the world's second-largest
economy lost steam at the close of 2013.
South Sudan's oil production remained a concern, even after
the government and rebels last week agreed to peace talks. Three
weeks of fighting have left more than one thousand people dead
and disrupted the oil supply from the African country.
The talks could be delayed after gunfire erupted in the
country's capital on Sunday.
An official in neighbouring Sudan, through which land-locked
South Sudan pumps its oil for export, said last week that
239,000 bpd of crude were being shipped through its pipeline.
(Additional reporting by Jacob Gronholt-Pedersen; Editing by
Joseph Radford, David Goodman, David Evans, Steve Orlofsky,
Jeffrey Benkoe and Chizu Nomiyama)