* Brent down more than $3 during session
* Dollar reaches two-week high against euro
* U.S. manufacturing expands at fastest rate in 2-1/2 years
(Updates prices to settlement, adds CFTC data)
By Anna Louie Sussman
NEW YORK, Nov 1 Brent oil fell sharply on
Friday, tumbling by nearly $3 a barrel, and settling at its
lowest point since early July, narrowing its premium to U.S.
crude in heavy selling.
Traders shrugged off Libya's oil supply outage and instead
focused on a strong dollar and a supply overhang that set an
overall bearish market tone.
U.S. crude oil futures sank to the lowest since June, while
Brent ended with its largest daily percentage loss also since
June. Brent's steeper losses narrowed its premium over WTI
CL-LCO1=R by $1.16 from Thursday's close, after it hit a
seven-month high of $13.60 in the previous session.
Brent crude for December delivery settled down $2.93
at $105.91 a barrel, a loss of 2.7 percent, its largest daily
percentage loss since June 20. The last time Brent settled lower
was on July 4 at $105.54.
U.S. oil for December fell $1.77 to settle at $94.61,
posting a fourth straight week of losses and its longest losing
streak since June 2012. It was the lowest settlement price for
the U.S. contract since June 21 at $93.69.
"We have weak fundamentals in the oil market, and once we
broke $95 in U.S. crude, the whole complex came under pressure,"
said Gene McGillian, an analyst at Tradition Energy in Stamford,
Brent prices drooped as traders sold positions to take
profit, McGillian added.
An industry report showing the U.S. manufacturing sector
expanded at its fastest pace in 2-1/2 years in October
strengthened the dollar to its highest in more than one month.
A firmer dollar makes commodities priced in the greenback
more expensive for overseas investors.
The dollar index, which measures the greenback
against a basket of six major currencies but is dominated by the
euro, rose 0.7 percent to its highest since mid-September.
"The euro currency has fallen a lot, which translates into
some dollar strength. We're really in a bearish market that is
latching onto the bearish news," John Kilduff, a partner at
Again Capital, said.
Concerns over supply from Libya wavered as North Sea oil
fields returned from maintenance, said Harry Tchilinguirian, an
oil analyst at BNP Paribas in London.
Months of disruptions in OPEC-member Libya have slashed oil
exports and rekindled supply worries, pushing Brent to a
one-month high of $112 a barrel on Oct 10.
Supplies of North Sea crude that underpin the Brent
benchmark are set to reach a 2013 high in November, loading
Healthy stockpiles of crude, including significant stocks of
oil in the U.S. Gulf Coast, the nations' refining center, have
pressured prices lower.
"The market's obviously concerned on the supply side," said
Andy Lebow, vice president at Jefferies Bache in New York.
Still, speculators had bet on rising prices as recently as
mid-October, government data showed on Friday. Money managers
raised their net long U.S. crude futures and options positions
in the week to Oct. 22, lifting them from the lowest level since
June, U.S. Commodity Futures Trading Commission (CFTC) data
(Additional reporting by Jeanine Prezioso in New York,
Alexander Winning in London and Manash Goswami in Singapore;
Editing by Alden Bentley and Marguerita Choy)