* Brent as low as $106.64, down over $2
* Dollar reaches two-week high vs euro
* US manufacturing expands at fastest in 2 1/2 years
LONDON, Nov 1 (Reuters) - Brent crude oil dropped to around $107 a barrel on Friday as a strong dollar outweighed concerns over a drop in Libyan crude exports.
Brent crude for December delivery was down by $1.84 at $107.00 at 1445 GMT after falling more than $2 to as low as $106.64.
The dollar rose to a two-week high against the euro, which fell after data showing slowing inflation led some in the market to forecast a near-term European Central Bank rate cut. It was up 0.62 percent against a wider basket of currencies.
An industry report showing the U.S. manufacturing sector expanded at its fastest pace in 2 1/2 years in October further strengthened the dollar.
Dollar strength makes commodities priced in the greenback more expensive for overseas investors.
"The euro currency has fallen a lot, which translates into some dollar strength. We're really in a bearish market that is latching onto the bearish news," John Kilduff, a partner at Again Capital, said.
U.S. oil for December was down $1.22 at $95.16, putting it in line for a fourth straight week of declines, its longest losing streak since June 2012.
U.S. oil has been pressured by healthy inventory data from the U.S. Energy Information Administration.
But on Friday, Brent's premium over U.S. crude oil , which had reached a seven-month high of $13.60 the previous session, narrowed to around $11.90.
Friday's fall in Brent was driven by technical factors rather than supply and demand fundamentals, said oil broker Christopher Bellew at Jefferies Bache.
Months of disruptions in OPEC member Libya have slashed oil exports and rekindled supply worries, pushing Brent to a high of $112 a barrel last month.
The return of North Sea oil fields from maintenance also was putting some pressure on Brent on Friday, said Harry Tchilinguirian, an oil analyst at BNP Paribas in London.
Supplies of North Sea crude that underpin the Brent benchmark are set to reach a 2013 high in November, loading programmes showed.
"Brent has been trading within a $2 range of $110 a barrel for roughly three months," Tchilinguirian said.
"It is supported at these levels by multiple supply-side risks, but today it is testing that support."