SINGAPORE: Brent futures held near $107 a barrel on Friday on expectations that demand in top consumers China and the United States will recover, but easing concerns about supply from the Middle East kept the gains in check. China's factory output expanded at its fastest pace in seven months in October as policymakers in the Asian powerhouse sought to ensure a steady, broad-based recovery. In the United States, while overall manufacturing fell last month, investors expect oil demand to recover as peak winter demand sets in. Brent crude rose as high as $107.39 a barrel but traded 2 cents lower on the session at $106.97 by 0641 GMT. The contract is poised to post its biggest weekly decline in a month. US oil fell 4 cents to $97.07, after rising as high as $97.51. It is set for its steepest weekly loss since June. "We are looking for a bottom as far as oil prices are concerned," said Tony Nunan, a Tokyo-based risk manager at Mitsubishi Corp. "We are at a trough in oil demand, and as we head into winter, demand will recover." The contraction in US factory output in October for the first time since late 2009, along with the euro zone losing momentum, may put pressure on oil, but prices are unlikely to fall much further as the demand outlook improves. Nunan expected Brent futures to bottom out at $106 a barrel, and both the benchmarks will recover once refineries in the United States come back online from maintenance, he said. The recent weakening in prices, with Brent sliding $10 a barrel from August's six-month high above $117, will help improve profits from processing crude into products, tempting refiners to ramp up just as winter demand picks up, he said. US crude futures had fallen "due to the build-up in stockpiles at Cushing, Oklahoma, but an increase in demand can be expected after the seasonal maintenance of refineries", analysts Phillip Futures said in a note. Brent may rebound to $107.65, while US oil may rise to $98.15 before falling again towards $94.82, according to Reuters technical analyst Wang Tao. Capping gains Continued progress in talks between Iran and the West over Tehran's nuclear programme helped cap further gains in prices. The White House hosted a meeting of aides to Senate committee leaders on Thursday seeking to persuade lawmakers to hold off on a package of tough new sanctions against Iran. This had been expected to come to a vote in the Senate Banking Committee last month but was held back after appeals from President Barack Obama's administration to let negotiations on Iran's nuclear programme get under way. "The progress of talks may not yield an immediate agreement or a deal on the nuclear issue, but will put a moratorium on further sanctions against Iran," Nunan said. "That may mean less oversight, and more Iranian oil leaking into the market."

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