UPDATE 8-Brent oil rises on Libyan clashes
* Libyan unrest eats into oil exports
* Market awaits Fed meeting minutes on Wednesday
* Front-month U.S. oil contract expires at end of session
* Coming up: API inventory data at 4:30 p.m. EDT
* Coming up: EIA oil data on Wednesday
(Adds changes in Brent pricing, section on Libya)
NEW YORK, Aug 20 (Reuters) - Brent crude oil futures were higher on Tuesday as violent clashes at a major Libyan port heightened concerns about potential supply disruptions in the Middle East, reversing earlier losses on concerns about the U.S. Federal Reserve's monetary easing policy.
The Libyan government asked tankers to leave the port of Es Sider, the country's largest, after striking workers at several major oil terminals allegedly attempted to sell crude themselves, bypassing the official force majeure shutdown.
The head of Libya's Petroleum Facilities Guard said that striking workers at Zuetini, the country's third-largest oil port, had fired on civilians and injured at least one person. Independent confirmation of the shooting was not immediately available.
Worries that the situation in Libya would continue to deteriorate helped support Brent crude prices, reversing earlier losses. About half of Libya's more than 1.2-million-barrel-per-day export capacity remains shut down due to civil unrest, industry sources said.
"We were down early on tapering concerns, and what seemed to turn the momentum around were concerns about clashes in Libya," said Phil Flynn, an analyst with Price Futures Group in Chicago
Brent crude oil futures for October were up 30 cents, trading at $110.20 a barrel at 12:40 p.m. EDT, (1640 GMT), after trading as low as $108.61 earlier in the session.
U.S OIL DOWN ON FED WORRIES
At the same time, U.S. oil prices slipped as traders took profit fearing the U.S. government would lay out plans to pull back its monetary easing program, which could ultimately dampen oil demand in the world's largest oil consumer.
The Fed will release minutes from its latest policy meeting on Wednesday that are largely expected to give clues on when the central bank plans to taper its monthly $85 billion in asset purchases that have supported commodities in recent years.
Many believe tapering could begin next month.
U.S. crude oil futures for September delivery, which expire at the end of the trading session, were down 41 cents at $106.69, after trading as low as $105.23. October futures were trading 27 cents lower at $106.59.
U.S. oil prices remained range bound between $103 and $108 per barrel, noted Gene McGillian, an analyst with Tradition Energy in Stamford, Connecticut.
Not even an expected draw in crude oil inventories was supporting prices, he said.
"This does seem to be predicated on expectations of what the Fed will do," he added.
U.S. commercial crude inventories likely fell last week by 1.4 million barrels, an initial poll of Reuters analysts showed ahead of the release of weekly data.
Industry group API is set to release its stockpile report on Tuesday at 4:30 p.m. EDT (2030 GMT). The U.S. Energy Information Administration issues its data on Wednesday at 10:30 a.m. EDT (1430 GMT).
(Additional reporting by Ron Bousso in London and Jessica Jaganathan in Singapore; editing by Jason Neely, David Cowell and Chizu Nomiyama)