UPDATE 4-Brent rises towards $107 on Libya, Iran uncertainty
* Lingering Libyan tension dampens supply optimism
* Conflicting signals from Iran talks add volatility
* Brent/WTI spread widens as U.S. oil stocks seen rising
* Stronger dollar checks gains
(New throughout, updates prices)
LONDON, Nov 12 (Reuters) - Brent crude futures rose towards $107 a barrel on Tuesday as tensions in major oil exporter Libya and uncertainty over nuclear talks between Iran and world powers clouded the supply picture.
A stronger dollar checked gains, however. A strong dollar makes commodities priced in the greenback more expensive for overseas investors.
Brent crude for December delivery was 40 cents higher at $106.80 a barrel at 1210 GMT after settling $1.23 higher in the previous session.
U.S. crude was down 38 cents at $94.76 a barrel after ending 69 cents up a day earlier.
The U.S. benchmark was pressured by an anticipated build-up in U.S. crude stockpiles, which drove the spread between the two benchmarks wider to around $12.00. <CL-LCO1=R>
"Brent had reached a relatively low level from which it was easy to rebound," said Harry Tchilinguirian, head of oil strategy at BNP Paribas in London.
Brent prices were supported by lower North Sea BFOE loadings for December, unrest in Libya and traders shifting focus to a return from refinery maintenance, he said.
"Tension brewing in Libya isn't good news for the reinstatement of light oil supply comparable to Brent," Tchilinguirian said.
On Monday, Libyan gas exports to Italy were halted by demonstrators, and an autonomy movement said it had formed a regional oil company to start selling crude a day earlier.
Strikes and protests across the country have slashed Libya's oil exports to less than 10 percent of its 1.25 million barrels per day (bpd) capacity, supporting oil prices.
Unsuccessful weekend talks over Iran's nuclear programme lifted Brent off last week's four-month low on Monday, but investors are waiting for the next round of talks on Nov. 20 for clearer signals as to whether the sanctions regime against Tehran will be relaxed.
Sanctions against Iran have helped support global oil prices by removing more than 1 million bpd of oil from world markets. Any rise in Iranian supply could push oil prices lower, analysts say.
"There were confusing signals coming from the Iran talks at the end of last week, and it's continuing to add volatility to oil markets," said Olivier Jakob, an oil analyst at Petromatrix in Zug, Switzerland.
Expectations of rising U.S. crude stockpiles pressured U.S. oil in particular, as a preliminary poll of Reuters analysts forecast a 1.6 million barrel rise in stocks when the U.S. Energy Information Administration publishes its data on Thursday.
Industry group the American Petroleum Institute will release its report on U.S. crude stocks on Wednesday.
On Tuesday, OPEC forecast demand for its oil in 2014 will average 29.57 million bpd, unchanged from its previous estimate.
(Additional reporting by Jacob Gronholt-Pedersen in Singapore; editing by William Hardy)