Brent crude oil slipped below $107 a barrel on Friday and was headed for its first monthly fall since September, weighed down by worries over emerging economies and U.S. plans to keep cutting monetary stimulus.

Brent, the international benchmark, was poised to slip 3.3 percent in January, following emerging markets lower after data this month showed China's fuel consumption rose at its slowest pace in over 20 years in 2013.

Drawing strength from a cold spell and an improving economy, the U.S. futures contract, known as WTI, is set to end little changed on the month, narrowing the difference between the two.

Brent crude had shed $1.01 to $106.93 a barrel by 1324 GMT, after closing 10 cents higher in the previous session. Trade was thin with some Asian markets closed for the Lunar New Year holiday.

U.S. oil shed $1 to $97.23. The spread held near the lowest settlement price since Nov. 7.

Oil joined a broader rout with emerging markets currencies hit by fresh turbulence and European shares on course for a monthly decline as concerns about the prospects for emerging economies spread.

"It's a down time for markets in general... as people worry about U.S. Federal Reserve tapering and the strong dollar and there are concerns about demand," said Simon Wardell, oil analyst at Global Insight.

"Our outlook is for a slow downward trend. There seems to be reasonable supply and signs that the Iran issue is de-escalating."

In addition to concerns about Asian demand, indications that crude markets were well supplied added downward pressure.

OPEC's oil output has risen in January from December's 2-1/2-year low, due to a partial recovery in Libyan supply and higher shipments from Iraq and Iran, a Reuters survey found on Friday. Output averaged 29.94 million barrels per day, up from a revised 29.63 million bpd in December.

The U.S. dollar traded up 0.1 percent against a basket of major currencies, after earlier touching one-week highs. A strong greenback usually weighs on commodities such as oil that are priced in the currency.

The dollar gained partly as U.S. gross domestic product grew at an annual rate of 3.2 percent in the final three months of last year. While that was a slowdown from the third-quarter, it was a far stronger performance than had been anticipated earlier in the quarter.

The dollar is also strengthening as the U.S. Federal Reserve stuck with its plan to keep cutting monetary stimulus, although U.S. oil was underpinned by the cold weather.

"The price differential between Brent and WTI fell to below $10 per barrel on a closing price basis for the first time since early November," Commerzbank analysts said in a note.

"For as long as the cold snap continues in the U.S., the trend towards a falling price gap is likely to continue, for this should attract more financial investors to bet on a further narrowing of the price differential."