* Oil price fall follows spike on Friday
* Kurdish forces make progress in Iraq against militants
* Libya raises oil output to 535,000 bpd
* WTI backwardation widens on Coffeyville restart expectations (Updates prices to settlement)
By Anna Louie Sussman
NEW YORK, Aug 18 (Reuters) - Brent crude oil shed nearly $2 a barrel to reach its lowest price in over a year on Monday as investor concerns over conflict in Ukraine and Iraq eased, and as higher Libyan oil output added to already ample supplies.
“You had a very solid run-up on Friday, probably related to geopolitical risk going into the weekend, and you have a hangover (Monday) because of that,” said Stephen Schork, editor of the Schork Report in Villanova, Pennsylvania.
Crude pared gains from Friday’s spike when the government in Kiev said its artillery had partially destroyed a Russian armoured column.
By Monday, Kiev military reported new successes overnight, building on a weekend breakthrough when Ukrainian troops raised the national flag in Luhansk, a city held by pro-Russian separatists since fighting began in April.
Brent crude fell $1.93 to settle at $101.60 a barrel, after notching a session low of $101.11, the lowest since June 2013.
U.S. crude for September fell by 94 cents to settle at $96.41, after paring losses from an earlier low of $95.81.
U.S. crude futures prices were briefly lifted off intraday lows by a report from industry intelligence company Genscape of “further increased activity” at CVR Refining LP’s 115,000 barrel-per-day Coffeyville, Kansas, refinery.
The Kansas Department of Health and Environment, however, said the refinery, which was shut by a fire on July 29, remained closed. The refinery has direct access to the Cushing, Oklahoma, oil storage hub and delivery point for the U.S. crude contract.
The September U.S. crude contract is set to expire on Wednesday. Its premium, or backwardation, to the October contract widened to $2.66, indicating supplies in the later month were expected to be more ample than in the immediate-term.
Phil Flynn, analyst at the Price Futures Group in Chicago, said Coffeyville could need additional crude as soon as it was up and running in order to make up for lost production.
He also said refineries were entering “shoulder season,” a period of weak oil demand when summer driving wanes and winter has not yet begun.
In Iraq, Kurdish peshmerga fighters and Iraqi forces have pushed Islamic State militants out of Mosul dam, state television reported, while higher Libyan output threatens to compound ample supply.
Advances by militants in Iraq in June prompted a rise in oil prices, although the fighting has yet to affect oil supplies from southern oil ports, the outlet by which almost all of Iraq’s crude exports reach world markets.
Libya’s production, disrupted for months by strikes and protests, had risen to 535,000 bpd on Sunday, higher than previously reported, but still far below the 1.4 million bpd pumped last year. (Additional reporting by Alex Lawler and Jacob Pedersen; Editing by David Evans, Keiron Henderson, Marguerita Choy and Lisa Shumaker)