RTRS:UPDATE 3-Brent climbs above $106 as steep fall lures buying
* Brent falls almost $3 in previous session
* Libyan tensions support prices
* Dollar index eases slightly after hitting 7-week peak
* Coming Up: U.S. factory orders; 1500 GMT (New throughout, updates prices, changes dateline from previous SINGAPORE)
By Alexander Winning
LONDON, Nov 4 (Reuters) - Brent crude futures rose above $106 a barrel on Monday as investors bought after steep falls in the previous session and as tensions in major oil exporter Libya escalated.
Leaders of a movement in Libya's oil-rich east unilaterally declared a regional government on Sunday, in a further challenge to the OPEC member's fragile central government.
Brent rose 39 cents to $106.31 a barrel by 1015 GMT, after settling nearly $3 lower on Friday at its lowest since July 4.
U.S. oil gained 26 cents to $94.87, after ending $1.77 lower and posting its fourth straight week of losses.
"We're seeing a slight technical rebound in Brent after the sharp drop on Friday," said Carsten Fritsch, an oil analyst at Commerzbank in Frankfurt.
"But the gains are limited by the overall bearish view of the oil market. You have abundant supply, especially in the United States, a strong U.S. dollar and geopolitical risks have been pushed back for the moment," he said.
The dollar index eased slightly on Monday after climbing to a seven-week peak on Friday.
Upbeat U.S. manufacturing data had stirred speculation that the Federal Reserve could roll back its monetary stimulus in December, instead of March as many currently expect, boosting the dollar and weighing on most commodities.
Should the Fed taper its stimulus programme, the dollar would receive a further boost, making dollar-denominated assets such as oil more expensive for holders of other currencies.
LIBYA LIMITING DOWNSIDE
Strikes at ports and oil fields across Libya have slashed crude production to about 10 percent of the North African country's capacity of 1.25 million barrels a day, keeping global oil prices supported.
"The situation in Libya will limit any downside in Brent, until that is sorted we can expect some support for oil," Fritsch at Commerzbank said.
But in the fourth quarter, oil prices could remain under pressure and slide from current levels, analysts at Barclays said in a note.
"In our view, Q4 is rich in swing factors for the crude oil markets, yet the directional bias for prices is slightly to the downside from current levels," they said.
"We maintain our Q4 forecast of $105 per barrel for Brent and do not expect prices to venture out too far on the upside from $110 per barrel currently."
The spread between Brent and the U.S. benchmark CL-LCO1=R was broadly steady at about $11.40 a barrel after reaching $13.60 last week, its widest since April.
