* Suez Canal operations said unaffected by strikes
* Valero shuts Port Arthur, Texas, refinery FCC
* China lifts interest rates for second time in six weeks
* Coming up: API oil data 4:30 p.m. EST (2130 GMT)
(Recasts, updates prices and market activity)
By Robert Gibbons
NEW YORK, Feb 8 (Reuters) - U.S. oil prices fell back on
Tuesday in volatile trading while Brent crude clung to gains
after news that Suez Canal operations were unaffected by
strikes helped alleviate the latest concerns about Egypt's
turmoil and the region's supplies.
Strikes by workers at companies in the Suez Canal zone will
not affect the canal operations and movement of ships, a senior
canal official told Reuters. []
Increased production by Saudi Arabia in November and
December, according to a report from the U.S. Energy
Information Administration, also helped cool crude prices,
according to analysts and brokers.
Oil futures had earlier turned positive on crude supply
disruptions in the United States and Colombia and as gasoline
futures rallied on refinery outages, helping offset pressure on
oil from China's second interest rate increase in six weeks.
In London, ICE Brent crude for March <LCOc1> was up 58
cents at $99.83 a barrel at 2:01 p.m. EST (1901 GMT), having
traded from $97.51 to $100.42.
U.S. crude oil for March delivery <CLc1> fell 58 cents to
$86.90 a barrel.
Amid the volatility, Brent's premium against U.S. benchmark
West Texas Intermediate crude hit a record high above $13 a
barrel, surpassing the previous record of $12.72 from Jan. 16,
2009, according to Reuters data.
U.S. gasoline futures <RBc1> rose, helped by news that a
loss of steam forced Valero Energy Corp <VLO.N> to shut down a
gasoline-making unit at its 287,000 barrels-per-day refinery in
Port Arthur, Texas. The company said it was not clear when the
unit would restart. []
Crude oil prices on both sides of the Atlantic fell sharply
earlier, after China moved to tame inflation with an interest
rate increase, the second in just over six weeks.
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BREAKINGVIEWS:
-- China tightens too little, too late []
Graphic
-- China rates and inflation http://r.reuters.com/bap87r
Market comments on rate rise []
Analysis on central bank's new clout []
FACTBOX-Who gains from Chinese inflation []
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(Additional reporting by Gene Ramos and Matthew Robinson in
New York and Zaida Espana in London; editing by Jim Marshall)
