Libyan rebels have surrounded the government's last functioning oil refinery in a city west of Tripoli, attempting to drive out about 100 fighters loyal to leader Moammar Gadhafi and continue their advance toward the capital.

Rebel commanders said Wednesday they have already shut down the fuel lines leading to and from the coastal refinery at Zawiya, 50 kilometers from Tripoli, knocking the facility offline. The reports could not be confirmed.

Residents fleeing Zawiya said opposition forces control most of the city, where their red, black and green flag can be seen. Pro-Gadhafi troops shelled it again Wednesday as snipers holed up at the refinery fired at rebel fighters.

The sprawling Zawiya complex provides only a small amount of the government's fuel oil, which Mr. Gadhafi has had smuggled in mainly from neighboring Tunisia and Algeria.

Clashes also continued on the eastern front in the strategic city Brega, where rebels said 18 of their fighters were killed and at least 33 wounded on Tuesday. Opposition forces are attempting to dislodge pro-Gadhafi troops from the oil port and refinery, which has not operated for months.

Meanwhile, the U.S. military has deployed two more armed Predator drones for surveillance operations over Libya, where opposition fighters remain heavily dependent on NATO air power.

On Tuesday, the rebels dismissed reports that they held talks with aides to the Libyan leader.

The head of the rebel Transitional National Council, Mustafa Abdel Jalil, said there have been no direct or indirect talks with Mr. Gadhafi's representatives, and that such talks are “unthinkable” unless the Libyan leader steps down.

Western news reports had said Mr. Gadhafi's aides met this week with Libyan rebels and U.N. envoy Abdul Ilah al-Khatib at a hotel on the Tunisian island of Djerba.