UPDATE 8-U.S. oil up more than $2.50 on China demand, tighter OPEC supply
* China's July implied oil demand up 5.5 percent on year
* Strikes, unrest, infrastructure woes cut OPEC supplies
* Libyan oil output falls to lowest since 2011
(Updates with settlement prices, stronger gains)
NEW YORK, Aug 9 (Reuters) - U.S. crude oil futures gained more than $2.50 a barrel in a sharp rally powered by signs of rising Chinese demand and concerns about supply disruptions in the Middle East.
Brent crude recovered from its lowest close in more than a month, but trading was more active in the New York market, with prompt-month September West Texas Intermediate (WTI) leading the gains.
The premium for September crude over December futures widened by 70 cents to $3.60, intensifying a market structure known as backwardation. Analysts cited upbeat data from China and more signs of a sharp fall-off in Libyan oil exports as possible causes for the appreciation of front contracts.
Market watchers also said that a rush to secure long positions in the front month contract ahead of the weekend also contributed to the rally.
"We're bouncing back from five sessions of losses," said Joseph Posillico, senior vice president of energy derivatives at Jefferies Bache in New York. He said "the bullish numbers are pushing us up" and traders "generally go long in the front two months, and that's going to lend strength in the spreads as well."
U.S. oil futures for September delivery climbed $2.57 to settle at $105.95. Brent crude oil rose $1.54 cents to $108.22. The North Sea benchmark's premium to its U.S counterpart narrowed to $2.25 at settlement time.
China's factory output grew in July at its fastest pace since the start of the year, adding to a run of data suggesting the world's second-largest economy may be stabilising after more than two years of slumping growth. Crude oil imports rose to a record, although implied oil demand softened from a four-month high in June.
"Today was the second day we heard positive news in China," said Gene McGillian, an analyst with Tradition Energy in Stamford, Connecticut. "We also continued to see problems in Libya, and there were rumours that Sudan is going to shut down its exports."
The International Energy Administration said it expected Libya's oil output to show a fall of 600,000 barrels per day to 400,000 bpd in early August, its lowest since the 2011 conflict.
U.S. investment bank Goldman Sachs maintained its 12-month forecast for Brent oil at $105 a barrel on Friday but said tighter OPEC supplies and a rise in Chinese net crude oil imports would push prices up in the near term.
Both the Brent and U.S. benchmarks were on course to post a weekly loss as investors closed their positions before September, when the U.S. Federal Reserve is expected to start paring back its massive stimulus programme.
Concerns that delays to oil supplies in the North Sea as well unrest in Middle Eastern OPEC producers could persist or even worsen have boosted prices, analysts said.
Adding to worries over tightening supplies, a report from the International Energy Agency suggested America's shale oil boom was protecting the world from steep oil price spikes as several OPEC members struggle to maintain production due to unrest and infrastructure problems.
A report from the Organization of the Petroleum Exporting Countries painted a similar picture on Friday.
(Additional reporting by Lin Noueihed and Florence Tan; Editing by David Gregorio and Grant McCool)