* Nuclear talks offer chance of more Iranian oil
* Libyan oil supply also higher
* U.S. crude stocks rise more than expected
* Coming Up: U.S. jobs data at 1330 GMT
(Updates detail, prices; paragraphs 6-7)
By Christopher Johnson
LONDON, Jan 16 Brent crude oil fell below $107 a
barrel on Thursday as expectations of more supply from the
Middle East and North Africa outweighed news of a large drop in
U.S. crude stockpiles.
Huge volumes of crude from Iran and Libya have been blocked
by political and civil disputes, but both countries may soon be
able to send more into world markets that are already well
Worries that the extra supply will tip the oil market into
surplus are outweighing signs of accelerating global economic
growth and increasing fuel demand, analysts say.
"In the short term, Brent crude oil appears to be heading
lower," said Carsten Fritsch, senior oil and commodities analyst
at Commerzbank in Frankfurt.
"Oil prices have resisted a strong upward move in stock
markets over the last month. That is a bearish sign."
Brent crude for February delivery was down 20 cents
at $106.93 a barrel by 1125 GMT, after settling 74 cents higher
on Wednesday. The contract was due to expire later on Thursday.
U.S. crude was up 30 cents at $94.47, after ending up
$1.58 in a third straight day of gains on Wednesday. The
February contract expires next Tuesday following a long U.S.
Iran and world powers are due to begin talks in February on
a deal to end a dispute over the Islamic republic's nuclear
programme, which could include the easing of sanctions that are
blocking up to 1.2 million barrels per day (bpd) of its oil
Under a preliminary accord that goes into effect on Jan. 20,
Iran's oil exports are to hold at current levels of about 1
A resolution of the nuclear dispute, seen likely by some
analysts, would bring huge volumes of Iranian crude into the oil
market and bring a glut unless other oil producers cut output.
Libyan oil supply could also rise sharply this year.
Libya's southern El Sharara oilfield resumed production last
week, increasing supply from the North African producer by more
than 300,000 bpd. Output would rise even further if a blockade
of Libya's eastern oil ports were to end.
U.S. crude oil found some support from data showing U.S.
crude oil inventories fell 7.7 million barrels last week,
compared with estimates of just 600,000 barrels. It was the
largest seven-week fall since records began.
The drop helped extend gains in U.S. oil.
Brent's premium to U.S. crude continued to narrow, due to
the expected start next week of the southern leg of the Keystone
pipeline in the United States. The pipeline should help ease a
supply glut at Cushing, Oklahoma, where the West Texas
Intermediate crude contract is priced.
The spread CL-LCO1=R reached a low of $12.42 on Thursday,
the smallest gap in nearly two weeks.
(Additional reporting by Jacob Gronholt-Pedersen in Singapore;
editing by Jane Baird and Keiron Henderson)