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Brent rises on Russia risk, Nigeria, Libya supply concerns

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[March 26, 2014]  By Elizabeth Dilts

NEW YORK (Reuters)  Brent crude oil futures rose on Tuesday on renewed geopolitical risk over Russia and supply disruptions in Nigeria and Libya, while U.S. crude was pressured lower by forecasts for a stock build.

U.S. President Barack Obama said the international community would not recognize Russia's annexation of Crimea on Tuesday, just one day after major industrialized nations warned Moscow of tougher economic sanctions if it goes beyond the seizure of the Baltic region.

Royal Dutch Shell declared force majeure on Nigeria's Forcados crude exports, due to a pipeline leak caused by oil theft. In Libya, production fell by roughly 80,000 barrels per day to about 150,000 bpd after a large oilfield was shut.

Weighing on U.S. oil prices, domestic commercial crude supplies were expected to have risen by 6.3 million barrels according to the industry group, the American Petroleum Institute.

That would make for the 10th straight weekly build, and more than double the 2.7 million barrel build analysts predicted in a Reuters poll. The U.S. Energy Information Administration will release its report on Wednesday at 10:30 a.m. EDT (1430 GMT).

Brent crude rose just 18 cents to settle at $106.99. U.S. crude fell 41 cents to settle at $99.19 per barrel.

The closely watched and traded Brent-U.S. crude oil price spread <CL-LCO1=R> widened by 59 cents to $7.80.

"The factors that are battling out are the threat of a supply disruption out of Ukraine, Libya and Nigeria, and the fact that we have weak fundamentals and will see a build tomorrow," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut.

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Speculation that China will act to support its slowing economy and robust consumer confidence numbers in the U.S. provided a floor for oil prices.

But the reopening of the Houston Ship Channel pressured U.S. oil. The channel is a critical waterway for oil shipments that had been closed for four days, which forced at least one big refiner to decrease output and gave a boost to U.S. oil prices.

U.S. crude stocks likely rose 2.7 million barrels on average last week, a Reuters poll forecast. Gasoline inventories are expected to have fallen 1.2 million barrels, and distillate inventories, including heating oil and diesel fuel, are also expected to have fallen 1.4 million barrels, the poll showed.

(Reporting by Alex Lawler and Keith Wallis; editing by Keiron Henderson, Diane Craft, Tom Brown and Chris Reese)

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