UPDATE 5-Oil prices flat on strong dollar; supply concerns
* Brent set for 3rd quarterly loss, longest since 1997/98
* Brent premium to U.S. hits narrowest since Jan 2011
* Turmoil in Libya and reduced output at North Sea offer support
* U.S. consumer sentiment close to six-year high
NEW YORK, June 28 (Reuters) - Brent crude oil futures seesawed near unchanged in choppy trading on Friday as the dollar gained following better-than-expected U.S. consumer data, although concerns about tightening international supplies lent support.
A widely watched gauge of U.S. consumer sentiment came in stronger than expected, although the Chicago Purchasing Managers Index (PMI) came in below expectations.
Federal Reserve governors earlier said the bank was in no rush to curtail its bond-buying program, but investors have been interpreting positive data as signs the Fed policy could shift sooner rather than later.
Comments by Fed governors on Friday appeared to allay investors' concerns the policy change would derail growth and dampen oil demand in the world's top oil consumer.
The dollar rose against the yen and euro on Friday, as investors again began pricing in the possibility that the Fed could begin to downsize its bond-buying program as soon as the September policy meeting.
A strong U.S. currency makes dollar-denominated commodities such as Brent crude oil more expensive for holders of other currencies, and weighs on prices.
Oil prices seesawed back and forth throughout the session, which was the last of the second quarter. Brent rose initially on positive data on German retail sales and reassuring comments from the governor of the People's Bank of China that the world's second-largest oil consumer was not in a credit crunch.
"Those were early helpful factors, but since then, we've had the dollar index turning around and rallying sharply and taking the steam out of crude oil," said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.
"And some of the U.S. macroeconomic reports weren't helpful, particularly the Chicago PMI, which came in so poorly."
Brent crude oil futures slipped 12 cents a barrel to $102.70 by 12:45 p.m. EDT (1645 GMT), after earlier hitting a session high of $103.44.
The North Sea benchmark, however, was still on track for its third quarterly loss, the longest losing streak since 1997/98, on persistent worries about the state of the global economy and its impact on oil demand.
U.S. crude oil gained 8 cents on the day to $97.13 a barrel.
The premium of Brent over U.S. oil futures was at $5.57 a barrel after narrowing earlier in the day to $5.40, its tightest since January 2011.
Brent has traded largely in a range between $99 and $107 since the beginning of May. U.S. crude has similarly been wedged between around $90 and $99 since May 1.
Friday marks the end of the second quarter, and trading volumes for both crudes were lighter than their 30-day moving averages.
"There's quarter-end bookkeeping so it's going to be a light trading day," said John Kilduff, partner at Again Capital LLC in New York. "I wouldn't take too much from the direction 1/8of the market 3/8 today."
Brent was also supported by continued turmoil in Libya and other oil-producing regions as well as a North Sea outage.
Britain's Buzzard oilfield output is expected to stay at a reduced rate of around 170,000 barrels per day (bpd) for around five days, an industry source said on Thursday.
Russian Urals crude values spiked to near a record high on Friday as oil producer Surgut sold barrels at a healthy premium due to a shortage of supplies from the world's largest oil producer from Baltic ports.