UPDATE 5-Oil falls on German remarks

* Germany says definitive solution unlikely at EU summit

* Coming Up: Sept U.S. industrial output at 1315 GMT (Update prices)

By Ikuko Kurahone

LONDON, Oct 17 (Reuters) - Brent crude extended losses and U.S. crude turned negative on Monday following remarks from Germany that the forthcoming EU summit would not produce a definitive solution to the euro zone debt crisis.

By 1114 GMT, Brent crude fell 73 cents to $111.50 a barrel, reversing its earlier gain to as high as $113.86. U.S. crude was down 4 cents at $86.76, easing from its high at $88.18.

North Sea benchmark Brent was leading the fall in key oil futures prices in percentage terms.

At the weekend, in unusually direct language, finance ministers and central bankers at a meeting of the Group of 20 major economies in Paris said they expected an Oct. 23 European Union summit to "decisively address the current challenges through a comprehensive plan".

However, German Finance Minister Wolfgang Schaeuble said on Monday that European governments would not present an ultimate solution for the sovereign debt crisis at the summit.

German Chancellor Angela Merkel has no concrete plans to meet top bankers ahead of the EU summit, the chancellor's spokesman, Steffen Seibert, said separately.

"Despite an improved macro outlook, a complete resolution to Europe's sovereign debt issue is still far away," Morgan Stanley said in its research note.

"Although the recent rally and ongoing supply issues suggest crude fundamentals are strong, we believe that risks remain skewed to the downside."

TIGHT MARKET

Supply of light crude has remained tight due to underproduction in the North Sea, Nigeria and Libya, which has just resumed oil exports after a civil war.

Oil inventories remain low in Europe and the United States ahead of the winter heating season.

"While a rapid resumption of Libyan production remains a wild card, until sustained exports are seen, the Brent and light sweet crude market will remain sensitive to minor disruptions," analysts at JPMorgan said in a report.

Libyan government fighters battled on Sunday to subdue pockets of resistance by pro-Muammar Gaddafi fighters, whose refusal to abandon the ousted leader's hometown of Sirte is delaying the country's move to democracy.

Brent's November contract, which expired on Friday, posted a weekly gain of 8.3 percent, the largest since the week to Feb. 25. U.S. crude rose $2.57 to settle at $86.80 a barrel, the highest since Sept. 20. It posted a weekly gain of 4.6 percent, the biggest since the week to Oct. 7.

Speculators increased their net long positions in ICE Brent crude oil and gas oil futures in the week to Oct. 11, data published by the IntercontinentalExchange (ICE) showed on Monday.

U.S. regulators this week will finalise their toughest crackdown yet on volatile oil and metals markets, concluding nearly four years of fierce debate over whether limits on speculative trade can tame prices. (Additional reporting by Manashi Goswami in Singapore, editing by Jane Baird)