UPDATE 1-Brent slips towards $108, Iran talks in focus

Florence Tan
Monday, 18 Nov 2013 | 1:04 AM ET

* Major powers, Iran to resume nuclear talks this week

* Libya intelligence chief kidnapped on Sunday

* Investors wait for Bernanke speech, Fed meeting minutes

(Adds comment, updates prices)

SINGAPORE, Nov 18 (Reuters) - Brent crude slipped towards $108 a barrel on Monday as traders focused on a resumption of talks between Iran and major powers that may lead to a rise in oil supply.

But internal strife in Libya and expectations that U.S. economic stimulus measures would continue for now supported prices.

Investors were also assessing how energy reforms pledged by China late last week would impact oil and gas demand in the world's largest net oil importer.

January Brent crude had fallen 34 cents to $108.16 a barrel by 0534 GMT, while U.S. crude for December delivery was down 34 cents at $93.50.

"The Middle East risk premium has wound back quite a bit probably because there is less potential for major supply declines with constructive news from Iran," said CMC Markets chief analyst Ric Spooner in Sydney.

Brent rose 3.2 percent last week after France blocked a deal with Iran and on signs the United Sates would continue its accommodative monetary policy.

Major world powers and Iran will engage in another round of "tough" talks in Geneva on Nov. 20-22. Sanctions against Iran because of its nuclear programme have kept some 1 million barrels of oil per day off the global market. Any agreement among nations could mean sanctions would be lifted, increasing market supply and depressing prices.

"One should probably not be too cynical and have one's mind open to the possibility of constructive developments over time," said Spooner of CMC Markets.

The kidnapping of Libya's deputy intelligence chief on Sunday highlighted the country's internal strife which has sharply reduced its oil exports.

"Continued supply outages, a weaker-than-expected U.S. dollar, and investor positioning have supported the Brent market early fourth quarter, but we continue to find Brent's risk-reward unappealing," Morgan Stanley analysts said in a note.

"With supply returning in the North Sea, weak refinery margins, and anemic demand, we find little upside for oil prices."

In the U.S., investors will scour Federal Reserve Chairman Ben Bernanke's speech and minutes of the central bank's October meeting for hints on when it might start paring its asset-buying programme. A speech last week by Janet Yellen, likely to be the next Fed chief, signalled it would need stronger evidence of economic growth before tapering.

U.S. oil futures posted their sixth straight week of losses last week as rising local supply widened their gap with Brent to about $14 a barrel ahead of the U.S. December contract's expiry on Wednesday.

Money managers cut their net long U.S. crude futures and options positions in the week to Nov. 12 for the second week in a row, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

(Editing by Muralikumar Anantharaman and Joseph Radford)