UPDATE 3-Oil climbs above $111, Saudi sees stronger demand

* Saudi sees demand rising in coming months

* Pace of U.S. economic growth worries investors

* U.S. crude stocks may have risen last week - Poll

(Updates previous SINGAPORE)

LONDON, April 2 (Reuters) - Oil edged further above $111 a barrel on Tuesday as the prospect of stronger demand in Asia outweighed concern over the pace of economic recovery in top consumer the United States.

Demand for crude from Saudi Arabia is likely to rise over the coming months, Saudi Oil Minister Ali Al-Naimi said on Monday - a sign the OPEC heavyweight sees a recovery in its biggest export market, Asia.

China, the world's second-largest oil consumer, imported just over 1 million barrels a day from the Kingdom last year, up more than 7 percent from 2011.

Brent gained 44 cents to $111.52 a barrel by 1053 GMT. U.S. crude rose 4 cents to $97.11 a barrel.

"The fact that oil prices have been able to gain despite negative framework conditions of late - weaker data from China and the U.S. just now, and a firmer U.S. dollar, weaker equity markets and rising U.S. inventories last week - can be interpreted as a sign of an incipient trend reversal," Commerzbank said in a research note.

But some investors anticipate downward pressure on oil prices as cooling U.S. factory activity in March suggests the world's largest economy lost some momentum at the end of the first quarter.

"You see the U.S. economy settling into a long hard grind of moderate growth of around 1 to 1.5 percent. Growth in previous recoveries was closer to 3.5 percent," said Ric Spooner, chief market analyst at CMC Markets, in Sydney.

"With this kind of growth, the United States is going to struggle to bring down unemployment, which is a real drag on the economy."

PEGASUS

U.S. crude could also be pushed lower by a pipeline leak in Arkansas that threatens to increase the supply of oil coming from Canada to the U.S. Midwest.

Exxon Mobil continued efforts to clean up thousands of barrels of heavy Canadian crude oil spilled from a near 65-year-old pipeline in the U.S. state.

Exxon's Pegasus pipeline, which can carry more than 90,000 barrels per day (bpd) of crude to Texas from Illinois, is used to supply U.S. Gulf Coast refineries.

"Any kind of bottleneck will cause weakness in the mid-continent, so you could see some temporary weakness in WTI," said Tony Nunan, a risk manager at Mitsubishi Corp in Tokyo, referring to West Texas Intermediate-grade crude oil.

"But this is also the time when U.S. refineries are starting to ramp up in preparation for the gasoline season."

A Reuters poll showed that U.S. commercial crude inventories may have risen by 2.3 million barrels for the week ended March 29, while refinery use was expected to have expanded 0.5 percentage points from the prior week's level of 85.7 percent of capacity.

(Additional reporting by Luke Pachymuthu in Singapore; Editing by Tom Pfeiffer)