UPDATE 4-Brent crude falls below $104, eyes on U.S. oil stocks

* US crude stockpiles fell 5.8 mln bbls last week -API

* May contract briefly falls to parity with June contract

* Coming up: U.S. EIA weekly oil stocks; 1430 GMT

(Updates prices, adds comment, API data)

LONDON, April 2 (Reuters) - Brent oil fell $1 to a near five-month low below $105 a barrel on Wednesday on poor manufacturing data from China and Europe, while investors awaited U.S. inventory data to help assess demand in the world's top oil consumer.

Crude prices on both sides of the Atlantic tumbled nearly 2 percent on Tuesday after the data, which was coupled with news that Libyan rebels could re-open vital oil ports within days.

Brent crude oil was down $1.14 to $104.48 a barrel by 1222 GMT, its lowest since Nov. 8. U.S. crude oil shed 55 cents to reach $99.19 a barrel, after dropping 1.8 percent in the previous session.

In a sign of weakness, the May contract briefly fell to parity with the June contract, threatening to move into a market structure known as contango, which signals ample supplies and weak demand.

Contango has been a rare occurrence in the Brent market over the past three years as supply outages from Libya and other countries have tended to keep the contract closest to delivery above those for delivery in the future.

"There are more bearish macroeconomic factors weighing on sentiment. We started the week with weaker data from China ... so one of the key contributors to global oil demand growth in recent years is going through a soft patch," said Harry Tchilinguirian, an analyst at BNP Paribas.

"At the same time ... people are looking at the U.S. Federal Reserve tapering continuing, which suggests a stronger dollar environment, and that is bearish for commodities."

Commodities such as crude oil are priced in dollars, which means a stronger greenback makes them more expensive to importers.

Surveys showing that factories across Europe eased back on the throttle in March and that China's vast manufacturing industry contracted for a third straight month have raised expectations that oil demand could falter.

Tuesday's slump was also attributed to news that a rebel group in eastern Libya had agreed with the government to end its seizure of oil ports, raising hopes for an end to an eight-month stalemate that has dried up state income.


Markets are now keenly awaiting oil inventory data due on Wednesday from the U.S. Energy Information Administration (EIA) for more trading cues.

Data released on Tuesday by the American Petroleum Institute (API) showed crude stocks had dropped 5.8 million barrels in the week to March 28 to 373.5 million barrels. The numbers confounded analysts' forecasts for an increase of 1.1 million barrels but failed to provide support even to U.S. oil.

"If the upcoming EIA weekly release were to reveal lower crude inventories consistent with the API data, we are likely to expect prices to retrace upwards," Phillips Futures analyst Tan Chee Tat said in a note.

Adding to the wider concerns about demand, easing political concerns over Ukraine have sapped some support for Brent, the international benchmark.

While tensions between Russia and the West persist, analysts and traders expect the crisis to have less impact on oil supplies than on natural gas.

Estimates for a drop in supply from the Organization of the Petroleum Exporting Countries (OPEC) could help underpin Brent, however.

A Reuters survey showed OPEC's oil output fell in March to its lowest since December as Iraq's oil revival suffered a setback and outages cut output in African producers.

(Additional reporting by Florence Tan in Singapore and David Sheppard in London; editing by Jason Neely and Jane Baird)