Brent Crude Falls Below US$103

Brent crude fell more than $1 to trade below $103 a barrel on Monday as Libya increased its oil output and as worries over supply from key producer Iraq eased.

* Libya raises oil output to 535,000 bpd
* Kurdish, U.S. forces make progress in Iraq against militants
* Oil prices fall after spike on Friday

The drop came following a spike in benchmark prices on both sides of the Atlantic on Friday amid fresh tensions in Ukraine, where government forces engaged a Russian armoured column.

"There was a scare on Friday, but investors realized over the weekend that geopolitical threats are becoming less serious," said Avtar Sandu, a senior commodities manager at Phillip Futures in Singapore.

"We have a situation where inventories and supplies are rising. So with geopolitical risks seemingly easing, people don't want to hold long positions," he said.

Brent crude for October delivery had fallen 78 cents to $102.75 a barrel by 0654 GMT, after trading as low as $102.35. The contract closed $1.52 a barrel higher on Friday.

U.S. crude for September delivery was 64 cents lower at $96.71 a barrel, after ending the previous session up $1.77 a barrel.

Libya's oil production rose to 535,000 barrels a day (bpd) on Sunday from 400,000 bpd earlier in the week due to higher output at the southwestern El Sharara, El Feel fields, a spokesman for National Oil Corp (NOC) said.

Even though oil ports in the east have reopened, oil production in the North African state is still way off the 1.4 million barrels per day it produced last year before a series of strikes, protests and blockades slashed output to as low as 200,000 bpd.

"Libya is something of an enigma for oil markets. The production volumes are still quite small, and let's see how many ships actually load at the reopened ports," said Sandu.

By Jacob Gronholt-Pedersen