Brent stays above $107, set for weekly gain

By Jacob Gronholt-Pedersen

SINGAPORE (Reuters) - Brent crude steadied above $107 a barrel on Friday, heading for a second weekly gain in three on optimism U.S. jobs data due later in the day will add to recent signs of economic improvement in the world's top oil consumer.

"The market is playing a bit of wait and see, but in general there is quite a bit of optimism we'll get good numbers and that is supporting oil," said Ben Le Brun, a market analyst at OptionsXpress in Sydney.

Large price swings are not expected ahead of the U.S. non-farm payrolls data due at 1330 GMT. A Reuters poll points to a recovery in U.S. jobs growth to 185,000 in January from a measly 74,000 in December.

Brent crude was up 17 cents at $107.36 at 0707 GMT, after rising almost a percent in the previous session - its biggest daily gain since January 22.

The bullish performance on Thursday stemmed partly from a report that showed the number of Americans filing new unemployment benefit claims fell slightly more than expected last week.

U.S. crude was down 16 cents at $97.68, hurt by expectations of lower demand during peak maintenance season.

Brent's premium to the U.S. benchmark was at $9.68 a barrel. The spread narrowed to $7.94 a barrel on Wednesday, the tightest since October 10.

JOBS NUMBERS

If the non-farm payrolls data delivers further signs of U.S. economic growth it could prompt the Federal Reserve to curb a monetary stimulus programme that has helped support risky assets such as commodities.

But traders reckoned it would take a significant deviatyion from expections for the data to shake the oil market.

"I think the market will be fairly tolerant and not really think in terms of tapering unless we see very good or very bad numbers," said Ric Spooner, chief market analyst at CMC Markets in Sydney.

Tighter supply of North Sea crude in March could support the Brent benchmark. Loading of the four crude streams Brent, Forties, Oseberg and Ekofisk (BFOE) will average 890,000 barrels per day (bpd) in March, down from an expected 1.03 million bpd in February, according to loading programmes.

Oil prices are also expected to be aided by peak refinery maintenance season as a slew of refiners in the United States and Asia will shut down units in the second quarter.

"That is going to limit demand for crude, but product prices could go up due to limited supply," said Le Brun.

Investors will also keep a close eye on Saturday's talks with Iran as the U.N. nuclear watchdog hopes to persuade the Islamic state to finally start addressing long-held suspicions it has worked on designing a nuclear bomb.

Tough international sanctions over the past two years have cut Iran's oil exports in half.

(Editing by Richard Pullin, Himani Sarkar and Simon Cameron-Moore)