xx UPDATE 8-Oil edges higher, set for weekly loss as Mideast risks ease
* Brent premium over U.S. crude widens to $3.40
* White House says Obama may meet Iran president next week
* Coming up: US CFTC commitment of traders data at 1930 GMT
(Updates prices, paragraph 4)
NEW YORK, Sept 20 (Reuters) - Brent crude oil ticked higher on Friday but was headed for its second weekly decline, losing more than 3 percent after a week of diplomatic progress in Syria and Iran drained some geopolitical risk premium from the market.
U.S. crude fell, as Friday's expiration of the contract for October delivery prompted liquidation selling, traders said.
Global benchmark Brent crude was set for a big weekly drop on the partial return of Libyan output, a reduced prospect of military action against Syria and signals from Iran that it is looking for a thaw in relations with the West.
Brent crude for November rose 16 cents to $108.92 by 12:57 p.m. EDT (1657 GMT). U.S. crude for October, which expires on Friday, fell 87 cents to $105.52.
Brent's premium over U.S. crude widened to $3.40 from Thursday's close at $2.90.
The global benchmark gained some support from nagging concern about Libyan output, falling U.S. crude inventories and the Federal Reserve's decision this week to maintain economic stimulus.
In early September, Brent's premium over U.S. crude widened to over $8 when Libyan supplies were disrupted.
"The market had jumped all the way to $8 then went back to $3, so people who had sold Brent at that premium are now buying back Brent and selling WTI," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut.
As of Wednesday, Libya's production had recovered to 620,000 barrels per day (bpd) after protesters agreed to reopen some oilfields. More than half the country's production remains offline.
"Supply tightness seems to be easing but Libya's export recovery is not something that's being assured," said Sijin Cheng, an analyst at Barclays.
Libyan output had collapsed to below 200,000 bpd in a stalemate between protesters and the government that lasted more than a month. Significant supply remains offline in Nigeria and in southern Iraq.
Nigerian supply remains constrained. Export schedules for November issued on Friday indicate lower exports of Bonny and no new cargoes of another large crude stream, Bonga. Nigerian oil is priced off Brent and outages support the London benchmark.
Iranian President Hassan Rouhani has sent signals that he is looking for a thaw in relations with the United States. The White House said leaders from both countries may meet next week.
Western sanctions targeting Iran's oil exports over Tehran's nuclear program have cut Iranian crude shipments by more than half, or more than 1 million bpd, since early 2012.
(Additional reporting by Alex Lawler, Florence Tan and Jacob Pedersen; Editing by David Gregorio)