UPDATE 9-Oil rises on Libyan clashes, Brent-WTI spread widest since July
* 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
(Updates prices, adds Seaway paragraph, line on market structure)
NEW YORK, Aug 20 (Reuters) - Brent crude oil futures rose on Tuesday as violent clashes at a major Libyan port heightened concerns about potential supply disruptions in the Middle East, reversing losses caused by concerns about the U.S. Federal Reserve's monetary easing policy.
U.S. crude oil fell, however, on a report of a shutdown of the Seaway pipeline, which carries crude oil from Cushing, Oklahoma, the delivery point for the futures' benchmark West Texas Intermediate (WTI) crude, to refineries on the Gulf Coast.
The Brent-WTI spread widened to it largest since July, passing through its 50-day moving average for the first time in five months.
"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 rose 49 cents to trade at $110.39 a barrel at 1:45 p.m. EDT, (1745 GMT), after trading as low as $108.61 earlier in the session.
U.S. crude oil futures for September delivery, which expire at the end of the trading session, were down $1.79 to $105.31 near midday and near the session low of $105.23.
October U.S. futures were trading $1.31 lower at $105.55, making the second-month contract pricier than the front-month, a market structure known as "contango," for the first time since July.
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.
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. 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 Nicolas Medina Mora Perez in New York, Ron Bousso in London and Jessica Jaganathan in Singapore; editing by Jason Neely, David Cowell, Chizu Nomiyama and Bob Burgdorfer)