CORRECTED-UPDATE 9-Brent crude rises, US falls in heavy spread trading
(Corrects change in Brent November contract to 46 cents from 16 cents, paragraph 9)
* Brent premium over U.S. crude widens
* White House says Obama may meet Iran president next week
By Anna Louie Sussman
NEW YORK, Sept 20 (Reuters) - Brent crude oil rose on Friday and front-month U.S. crude fell heading into expiry as traders took profits on the spread between the two contracts.
October U.S. crude, which expired at the close of trade, saw the biggest move on the day, with the selloff steepening toward the close of trade.
The spread between the October and November contracts narrowed nearly 70 cents on the day, ending with the November contract holding a 15 cent premium to the nearby month.
"I think you saw a lot of rolling out of the October contract," said Phil Flynn, an analyst with the Price Futures Group in Chicago, Illinois.
The November contract also fell, widening the contract's discount to November Brent by nearly $1.50 to $4.40 a barrel in late activity.
In early September, Brent's premium over U.S. crude widened to over $8 when Libyan supplies were disrupted.
"The market had jumped all the way to $8 then went back to $3, so people who had sold Brent at that premium are now buying back Brent and selling WTI," said McGillian.
Despite Friday's gains, Brent ended the week down 3 percent as Libyan output improved and signs of diplomatic progress in Syria as well as Iran's ongoing standoff with the West helped drain some of the geopolitical risk from the market.
Brent crude for November rose 46 cents to settle at $109.22. U.S. crude for October, which expired on Friday, fell $1.72 to close at $104.67. As the October/November spread contracted sharply, the spread between November and December crude narrowed by 30 cents to just over $1.
Money managers cut their net long U.S. crude futures and options positions by 3,841 contracts to 331,186 in the week to Sept. 17, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
As of Wednesday, Libya's production had recovered to 620,000 barrels per day (bpd) after protesters agreed to reopen some oilfields. More than half the country's production remains offline.
"Supply tightness seems to be easing but Libya's export recovery is not something that's being assured," said Sijin Cheng, an analyst at Barclays.
Libyan output had collapsed to below 200,000 bpd in a stalemate between protesters and the government that lasted more than a month. Significant supply remains offline in Nigeria and in southern Iraq.
Nigerian supply remains constrained. Export schedules for November issued on Friday indicate lower exports of Bonny and no new cargoes of another large crude stream, Bonga. Nigerian oil is priced off Brent and outages support the London benchmark.
Iranian President Hassan Rouhani has sent signals that he is looking for a thaw in relations with the United States. The White House said leaders from both countries may meet next week.
Western sanctions targeting Iran's oil exports over Tehran's nuclear program have cut Iranian crude shipments by more than half, or more than 1 million bpd, since early 2012. (Additional reporting by Alex Lawler, Florence Tan and Jacob Pedersen; Editing by David Gregorio and Jim Marshall)
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