* Iran deal to take effect Jan. 20
* Obama urges Congress not to impose new sanctions on Iran
* North Sea Buzzard oilfield ramps up after problems
* Coming up: API oil inventory data at 4:30 p.m. Tuesday (New throughout, updates prices and market activity to settlement, adds details on gasoline)
By Jeanine Prezioso
NEW YORK, Jan 13 Oil fell on Monday after news of a deal between Western nations and Iran to curb the OPEC country's nuclear program and as production resumed from Libya and a key North Sea oilfield.
Oil futures were also pressured by declines in gasoline futures and equities, as last week's much weaker-than-expected U.S. jobs data also weighed on hopes of economic recovery in the world's largest oil consumer.
U.S. gasoline futures led the complex lower, losing more than 1 percent, as a combination of factors spurred selling. U.S. stock indexes had fallen 1 percent by late afternoon.
Traders flogged winter grade fuel, the market expected a large build in inventories for the second week in a row and two large refineries appeared to be restarting, all weighing on prices, traders and brokers said.
Severe winter weather last week curbed demand for jet fuel and gasoline, which also pressured prices, said Oliver Sloup, director of managed futures with iitrader.com in Chicago.
"There were a lot of flight cancellations over the past week or so, so that's going to be correlated with the build in gasoline and a lot people were off the road, not driving, with sub-zero temperatures," he said.
Brent crude for February delivery ended the session 50 cents lower at $106.75, after settling 86 cents higher on Friday. U.S. crude slipped 92 cents to settle at $91.80 per barrel, after closing $1.06 higher in the previous session.
Brent prices were pressured by increased Libyan output and the pending restart of the key Buzzard oilfield in the North Sea.
The sharper drop in the U.S. benchmark sent Brent's premium to U.S. oil to more than $15 for a second time in six weeks. The spread CL-LCO1=R ended the session at $14.95 after widening by nearly $1 to $15.51 per barrel.
U.S. gasoline futures declined 1.3 percent to $2.6341 per gallon.
The gasoline-making unit at Irving Oil's St. John refinery remained offline but saw increased activity after being shut down on Friday, according to a report by industry intelligence provider Genscape. Motiva Enterprises, the largest U.S. refinery, restarted a boiler on the refinery's sole gasoline-making unit over the weekend.
The U.S. added less than half the amount of jobs expected in December prompting a U.S. central banker in a speech on Monday to say "very accommodative" monetary policy remains appropriate as the labor market has not yet healed. Traders have been awaiting guidance from the U.S. Federal Reserve as to how quickly it will pull back on its commodity-friendly bond-buying program.
The market also factored in upcoming refinery turnarounds in the U.S. Gulf Coast that may curb oil demand.
IRAN DEAL LOOMS
The deal between Iran and six major powers, intended to help resolve a standoff over Tehran's nuclear ambitions, will come into force on Jan. 20, the Iranian Foreign Ministry and the European Union said on Sunday.
Some analysts and traders took this to mean that the 1 million barrels of Iranian oil, kept off the market by sanctions over its nuclear program, would return soon, which drove down prices. Some sanctions relief would start on the first day of the six-month agreement's implementation on Jan. 20 and some will be withheld until its final day, senior U.S. officials said.
U.S. President Barack Obama urged Congress not to impose additional sanctions on Iran, while the ruler of Dubai said the international community should ease sanctions on the Islamic Republic.
The West's deal with Iran could cause further rifts between two Muslim sects and destabilize the region and threaten supply, said Bill O'Grady, chief market strategist at Confluence Investment Management in St. Louis. Iran is a Shi'ite republic and Sunnis dominate Saudi Arabia.
"I do think that people in the market are beginning to realize a nuclear deal in Iran doesn't ease tensions, in fact it may raise them," he said. "That sentiment is starting to steadily seep into the market and as it does it should have a significant impact on the Brent/WTI spread."
Brent's losses were limited as buyers of Iraq's Basra Light oil will see a reduction in February volumes. (Additional reporting by Simon Falush in London and Jacob Gronholt-Pedersen in Singapore; Editing by Dale Hudson, Meredith Mazzilli, Bernadette Baum and David Gregorio)