UPDATE 7-Oil falls on weak demand, gasoline futures slide
* Seaway pipeline expansion narrows Brent/U.S. crude spread
* U.S. gasoline futures fall sharply
* Saudi supply cut may indicate expected slower demand
* China December inflation rise may curb stimulus efforts
* Coming up: CFTC positions data 3:30 p.m. EST Friday
(Recasts with updated prices, market activity; changes dateline, pvs LONDON)
NEW YORK, Jan 11 (Reuters) - Crude oil futures fell on Friday on concerns about lackluster economic growth, tepid demand and weak U.S. gasoline futures, while a U.S. crude oil pipeline expansion narrowed the spread between Brent and U.S. crude futures.
The Seaway crude oil pipeline, shut since Jan. 2 to complete a major expansion, restarted on Friday with the throughput of the line taking oil from the U.S. Midwest to the Gulf Coast expanded to 400,000 barrels per day (bpd) from the previous 150,000 bpd.
U.S. gasoline futures dropped more than 2 percent, the biggest percentage slide in the futures complex, on talk among traders of large volumes of European gasoline headed to the New York Harbor, delivery point for U.S. oil product futures.
Crude futures retreated early on Friday "after the latest inflation figures from China created uncertainty over the amount of stimulus the government might now be willing to inject into the economy," Addison Armstrong, senior director at Tradition Energy said in a research note.
China's annual consumer inflation rate quickened to a seven-month high of 2.5 percent in December on rising food prices, above expectations.
Brent February crude fell $1.73 to $110.16 a barrel at 12:03 p.m. EST (1703 GMT), retreating below its 100-day moving average of $111.05. Brent's $109.60 session low was below the 50-day moving average at $109.73.
U.S. February crude was down 60 cents at $93.22 a barrel, having fallen as low as $92.65.
Brent's premium to U.S. crude <CL-LCO1=R> fell more than $1 and dropped under $17 a barrel for the first time since September.
The spread between the two benchmark futures contracts has narrowed from more than $26 a barrel in November on expectations the Seaway expansion would relieve the supply glut in the central United States, especially at the Cushing, Oklahoma, delivery hub for the U.S. light sweet crude oil contract.
U.S. RBOB gasoline futures were down 6 cents at $2.7333 a gallon and heating oil futures slipped 4 cents to $3.0143 a gallon.
The expectations for gasoline cargoes heading to the New York Harbor pressuring RBOB futures follows Thursday's news of Russian gas oil cargoes being offered into the harbor, which pressured heating oil futures.
After crude futures on Thursday received support from news that top oil exporter Saudi Arabia had cut production in the last two months of 2012, the cuts indicated a lack of demand and an effort to defend prices and helped pressure crude futures on Friday.
"Although the sharp Saudi production cuts last month toward 9 million barrels a day were widely mentioned as a bullish consideration, we viewed the reduction as further evidence of global demand weakening and consequently deserving of a bearish checkmark," said a research note from Jefferies Bache.
OPEC's top producer cut oil production by 700,000 barrels per day (bpd) to 9 million bpd during the last two months of 2012, according to a source familiar with Saudi policy.
Major customers for Saudi crude said the cuts were driven by lower demand.
(Reporting by Robert Gibbons in New York, Peg Mackey in London and Ramya Venugopal in Singapore; Editing by Bob Burgdorfer)