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UPDATE 6-Brent steady near $106 as U.S. data supports

Alexander Winning
Monday, 4 Nov 2013 | 10:54 AM ET

* Brent steadies after heavy losses in previous session

* Fed tapering concerns ease after U.S. data

* Prompt contract moves to discount for 1st time since June

(Recasts to reflect gain in prices)

LONDON, Nov 4 (Reuters) - Brent crude futures steadied near $106 a barrel on Monday after hitting a four-month low, as weaker-than-expected U.S. economic data eased concerns the Federal Reserve would trim monetary stimulus in the near term.

New orders of non-military capital goods other than aircraft, an indicator of business spending plans, fell 1.3 percent in September, the Commerce Department said.

Should the Fed rein in its monthly bond purchases, the dollar would likely strengthen, making dollar-denominated assets such as oil more expensive for holders of other currencies.

Brent for December rose 10 cents to $106.01 by 1530 GMT after hitting a four-month low of $105.13 a barrel earlier in the session. Brent dropped $3 on Friday.

U.S. crude for December gained 22 cents to $94.83 a barrel after ending $1.77 lower in the previous session.

Brent futures for delivery next month briefly fell below the January contract <LCOc1-LCOc2>, the first time prices for prompt delivery have been at a discount since June. This structure, known as contango, indicates a weak market.

"The overall view of the oil market is bearish. You have abundant supply, especially in the United States, a strong U.S. dollar and geopolitical risks have been pushed back for the moment," said Carsten Fritsch, an oil analyst at Commerzbank.

Commerzbank slashed its 2014 price forecast for Brent by $9 to $106 a barrel on Monday, saying the global oil market should remain amply supplied next year.

Meanwhile, the Intercontinental Exchange said hedge funds and other large speculators had reduced their bets on rising Brent prices for the eighth time in nine weeks in the seven days to Oct. 29.

Fund bets on rising Brent prices have almost halved to 119,451 net long positions, the equivalent on paper of almost 120 million barrels of oil, since hitting a peak of 231,962 net long positions in late August, when Brent was close to $117.

LIBYAN TENSIONS SUPPORT

Tensions in major exporter Libya provided support for oil as leaders of an autonomy movement in the country's oil-rich east unilaterally declared a regional government on Sunday.

Strikes at ports and oilfields have slashed crude production to about 10 percent of Libya's capacity of 1.25 million barrels a day.

The spread between Brent and U.S. benchmark WTI <CL-LCO1=R> was steady at around $11.20 after reaching $13.60 last week, its widest since April.

U.S. oil has been pressured by inventory data from the Energy Information Administration pointing to healthy stocks at the Cushing, Oklahoma delivery point for the U.S. futures contract.

Harry Tchilinguirian, head of oil strategy at BNP Paribas in London, said the Brent/WTI spread could widen to $15 in the near term as weak refining margins limit the drawdown of Cushing stocks and outages of light oil support Brent.

"Double-digit spreads are likely to persist in the short term," Tchilinguirian said.

(Additional reporting by David Sheppard in London and Manash Goswami in Singapore; Editing by William Hardy and Dale Hudson)

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