* Brent as low as $106.64, down over $2
* Dollar reaches two-week high vs euro
* US manufacturing expands at fastest in 2 1/2 years
By Anna Louie Sussman
NEW YORK, Nov 1 (Reuters) - Oil prices fell broadly on Friday, heading for a large weekly percentage decline, as a strong dollar and ample supplies outweighed concerns about a drop in Libyan crude exports.
U.S. crude oil futures sank to the lowest since late June, while Brent was on track for one of its largest daily percentage losses in more than one month. Brent's steeper losses narrowed its premium over WTI by around 80 cents from the previous session's close, after it hit a seven-month high in the previous session.
Brent crude for December delivery was down by $2.15 to $106.69 a barrel by 1:23 p.m. EDT (1723 GMT) after falling to a session low of $106.56. It was on track to finish 1.9 percent lower on the day and slightly lower on the week.
An industry report showing the U.S. manufacturing sector expanded at its fastest pace in 2-1/2 years in October strengthened the dollar, which weighed on oil prices.
Dollar strength makes commodities priced in the greenback more expensive for overseas investors.
The dollar index, which measures the greenback against a basket of six major currencies but is dominated by the euro, rose 0.7 percent to its highest since mid-September.
"The euro currency has fallen a lot, which translates into some dollar strength. We're really in a bearish market that is latching onto the bearish news," John Kilduff, a partner at Again Capital, said.
U.S. oil for December was down $1.32 at $95.06, putting it in line for a fourth straight week of decline, its longest losing streak since June 2012.
On Friday, Brent's premium over U.S. crude oil narrowed to around $11.66, after hitting a seven-month high of $13.60 the previous session.
Concerns over supply from Libya wavered as North Sea oil fields returned from maintenance, said Harry Tchilinguirian, an oil analyst at BNP Paribas in London.
Months of disruptions in OPEC-member Libya have slashed oil exports and rekindled supply worries, pushing Brent to a one-month high of $112 a barrel on Oct 10.
Supplies of North Sea crude that underpin the Brent benchmark are set to reach a 2013 high in November, loading programs showed.
U.S. oil has been pressured by healthy inventory data from the U.S. Energy Information Administration, including significant stocks of crude oil in the U.S. Gulf Coast.
Asian demand for crude oil has increasingly been filled by West African oil as U.S. imports of that crude have dwindled to a 17-year low.
"The market's obviously concerned on the supply side," said Andy Lebow, vice president at Jefferies Bache in New York.
"According to the last CFTC report, there was still significant length in the market and that's being liquidated now."