Brent stays above $111 on South Sudan conflict

Traders also eye tighter fuel supply as a strike by workers shut a third of France's refinery capacity

Brent crude stayed above $111 a barrel on Tuesday as conflict in South Sudan threatened its oil output at a time when production cuts in Libya are already curbing global supply.

Traders also eyed tighter fuel supply as a strike by workers shut a third of France's refinery capacity, boosting gasoline futures in the United States.

Brent is on track to close flat this year from 2012 amid a well supplied market and slower fuel demand growth in China, despite outages in Iraq, the North Sea and Libya.

West Texas Intermediate (WTI) crude is up 7.5% for the year, narrowing its gap with Brent which widened to almost $20 earlier this year, as more pipelines diverted oil away from the contract's delivery point in Cushing, Oklahoma, reducing a supply glut.

February Brent crude had edged down 1 cent to $111.55 a barrel by 0607 GMT, while WTI for February delivery slipped 21 cents to $98.70. NYMEX trading will close an hour early on Tuesday.

"In countries like South Sudan ... there's always a risk to production although the market doesn't appear to be reacting much to it at the moment," said Ric Spooner, chief market analyst at CMC Markets in Sydney. "Traders will be monitoring the situation."

The United Nations could nearly double the size of its peacekeeping force in South Sudan, while rebel leader Riek Machar and President Salva Kiir both indicated they were ready to talk to try to end a deepening conflict that has killed hundreds of people.

South Sudan's Information Minister dismissed claims by Machar that his rebels have taken over all the major oil fields in Unity and Upper Nile states as "wishful thinking".

Any disruption in Sudanese oil supply will add to Libya's production cut of more than 1 million barrels per day as its key oil ports stay shut.

US gasoline prices remained elevated on the prospect of tighter supply as a strike in France kept a third of its oil refining sector shut for more than a week.

Despite the geopolitical tensions in Africa, oil price gains have been capped by a well-supplied market.

"I find it hard to get bullish about oil prices," Spooner said. "The market is very well supplied as there's plenty of capacity so it's been difficult for oil to make much of an improvement."

Brent faces significant resistance at $116.25, while it is supported at the 200-day moving average of $107.40, he said.

Traders will be scouring US oil inventories data to gauge supply.

US crude oil stockpiles likely fell for the fourth straight week last week, while gasoline inventories saw a preliminary rise, a Reuters poll of analysts showed on Monday.

The API will release its data on Tuesday at 4:30 p.m. EST (2130 GMT), while the EIA will publish its data on December 27 at 11:00 a.m. EST due to the closure of the Federal Government on Wednesday for Christmas.