* Euro zone debt crisis stokes risk aversion
* Brent-WTI spread narrows as US crude rises
* Coming Up: API oil inventory data, Tues 4:30 p.m. EDT (Recasts, updates prices, market activity)
By Edward McAllister
NEW YORK, Sept 12 (Reuters) - Brent crude fell in volatile trade on Monday, weighed down by concerns the euro zone debt crisis could dent the global economic recovery and a bout of spread trading.
U.S. crude rose more than 1 percent as traders sold the spread between WTI and Brent crude prices after it widened to a record high last week.
Brent futures
"In the Brent market, we are seeing a little more profit-taking on the WTI-Brent spread and that is why Brent is down a little and WTI is up," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
The spread between WTI and Brent crude narrowed to below
$24 after closing at $25.53 on Friday
U.S. crude has been at a discount to Brent in part due to the glut of supplies trapped in the U.S. Midwest. A lack of pipelines has left growing production stranded at the Cushing storage hub without access to refineries on the Gulf Coast.
In afternoon trading volumes in New York, Brent trade was twenty percent above the 30-day average, with U.S. crude 13 percent below the 30-day average.
Wall Street dipped in volatile trade, on concern about the global economy. [.N].
Worries mounted that Greece may default on its debts, after finance ministers of the Group of Seven (G7) industrialized economies pledged a joint response to the slowdown but offered nothing specific to help their economies. [ID:nN1E78728T]
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Take A Look on G7 meeting: [ID:nL5E7K61TC]
For a 24-hour technical outlook on oil:
http://graphics.thomsonreuters.com/WT1/20111209091739.jpg
China's oil demand coverage: [O/CNDEMAND]
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OPEC CUTS FORECAST
The Organization of the Petroleum Exporting Countries cut its forecast for global oil demand growth next year because of a worsening economic outlook. OPEC said a disappointing U.S. economic performance could further weigh on fuel use.
OPEC said in a report world oil demand would rise 1.06 million barrels per day (bpd) in 2011, 150,000 bpd less than that expected last month. The growth estimate for next year was lowered by 40,000 bpd to 1.27 million bpd. [ID:nL3E7KC2CU]
Investors were also looking at data that showed China's implied oil demand in August slipped to its lowest rate this year as maintenance and accidents cut into refinery production.
Fuel consumption in the world's No.2 user has been losing steam since May, with growth easing from the double-digit pace seen since last year as higher crude costs have squeezed refining margins and Beijing's credit tightening cut into fuel spending.
Still, on a year-on-year basis, China's oil use expanded 7.8 percent, Reuters calculations based on preliminary government data showed on Saturday. [ID:nL3E7K928K]
Concern eased regarding damage to U.S. Gulf oil infrastructure after Tropical Storm Nate made landfall in central eastern Mexico. No other major weather disturbances were expected to affect the hydrocarbon-rich region in the short term.
Nate weakened to a tropical depression on Sunday as it moved further inland after cutting Mexican oil production by 178,800 barrels a day as of Friday. Mexico's Dos Bocas port re-opened to shipping on Sunday, but the crude-exporting hub of Cayo Arcas remained closed. [ID:nS1E78A01P]
Oil markets also eyed production and exports of Libyan crude following the country's power transition. Libyan oil firm Arabian Gulf Oil Company said on Monday it restarted production at the eastern oil field of Sarir in an early sign the industry is coming back to life. [ID:nL5E7KC16E] (Additional reporting by Christopher Johnson in London and Alejandro Barbajosa in Singapore; Editing by Andrea Evans, Bob Burgdorfer and David Gregorio)