UPDATE 2-Brent holds above $109 on Libya, US crude eyes worst month since Feb

Manolo Serapio Jr
Thursday, 31 Oct 2013 | 3:38 AM ET

* Brent on track for fourth monthly gain in five

* Brent-WTI spread near 6-month highs at around $13

* U.S. crude has fallen 5.5 pct in October

* Libya may resume exports from key port in 10 days -official

(Updates prices, monthly milestone for WTI)

SINGAPORE, Oct 31 (Reuters) - Brent crude held well above $109 a barrel on Thursday and was set to end October with its fourth monthly gain in five, bolstered by disruptions to shipments from key producer Libya.

News that the strife-hit OPEC member hopes to resume exports from its key Mellitah port within 10 days weighed on prices, although the current shipment pace of around 150,000-200,000 barrels per day of crude remains a fraction of the country's 1.25 million bpd capacity.

U.S. oil futures are on course for their worst month since February, having fallen nearly 6 percent so far in October amid a sustained increase in stockpiles in the world's top oil consumer, even as the Federal Reserve left its economic stimulus intact.

U.S. crude's losses have widened its discount to Brent <CL-LCO1=R> to around $13, near six-month highs reached last week.

Brent crude for December delivery was down 26 cents at $109.60 a barrel by 0724 GMT. The crude benchmark is up 1.1 percent in October.

"The situation in Libya remains uncertain. There were expectations earlier of a gradual recovery in production but provided there's no further escalation in protests," said Chee Tat Tan, investment analyst at Phillip Futures, who sees immediate support for Brent at $107.

Strikes and protests by militias, and minorities demanding more political rights or better pay have shut down much of the North African country's oil output.

Libya is producing around 250,000-300,000 bpd of crude, of which 100,000 bpd is being used domestically, with the rest being exported, Salah A. Ben Ali, manager of international cooperation at the oil and gas ministry, said on the sidelines of the Singapore International Energy Week conference.

Except Hariga "all other export terminals are closed," he said.

U.S. crude was off 8 cents at $96.69 a barrel. West Texas Intermediate oil has fallen 5.5 percent this month, its steepest loss since February.

Oil stocks at Cushing, Oklahoma - the delivery point for U.S. oil futures - rose by more than 2 million barrels last week, the largest build since December 2012, according to data from the U.S. Energy Information Administration.

The data, released on Wednesday along with figures showing the largest six-week increase in overall U.S. inventories since April 2012, helped widen the spread between WTI and Brent to $13.36 overnight. That gap hit $13.40 on Oct. 23, the biggest since early April.

"While we continue to get numbers that support the evidence that there is an excess of supply, we're looking for demand to ramp up to clear that inventory," said Ben Le Brun, market analyst at OptionsXpress in Sydney.

"I would certainly expect some demand, be it technical or fundamental, to kick in before WTI reaches $95."

U.S. oil touched a four-month low of $95.95 last week, but has since regained some ground on expectations demand would pick up as U.S. refineries emerge from their maintenance season.

(Reporting by Manolo Serapio Jr.; Editing by Richard Pullin and Joseph Radford)