UPDATE 9-U.S. oil rises 2.5 percent on China, tight 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
* North Sea production interrupted
(Adds details throughout. Updates with settlement prices.)
NEW YORK, Aug 9 (Reuters) - U.S. crude oil futures finished sharply higher on Friday reversing five days of losses in the largest one-day percentage gain in a week on signs of rising Chinese demand and concerns about supply disruptions in the North Sea and the Middle East.
Brent crude recovered from closing at its lowest point in more than a month in the previous session, but trading was more active in the New York market, with front-month September West Texas Intermediate (WTI) leading the gains, sparking sharp moves in spread trades.
The premium for September crude futures over December crude <CLU3-Z3> widened by as much as $1.03 cents from the prior day's settlement price to $3.90.
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 a rush to buy back contracts to cover short positions 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.
The positive Chinese data buoyed the market and traders "generally go long in the front two months, and that's going to lend strength in the spreads as well," he added.
U.S. oil futures for September delivery climbed $2.57 to settle at $105.95, after hitting a high of $106.24. Brent crude oil rose $1.54 cents to $108.22. The North Sea benchmark's premium to its U.S counterpart widened from an intraday high of $1.78 of to settle at $2.25 per barrel.
Still, both Brent and U.S. oil posted weekly losses as investors closed their positions before September, when the U.S. Federal Reserve is expected to start paring back its massive stimulus program.
Friday's rally helped offset the losses. U.S. oil lost 0.9 per cent for the week, while Brent lost 0.67 percent.
CHINA DATA/SUPPLY DISRUPTIONS
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.
Bullish news out of China coupled with supply disruptions supported prices. The International Energy Administration (IEA) said it expected Libya's oil output to show a drop of 600,000 barrels per day to 400,000 bpd in early August, its lowest since the 2011 conflict.
The Forties Pipeline System in the North Sea was shut down for a few hours Thursday night, prompting suspension of production at Buzzard, Britain's largest oilfield and the most important contributor to the Forties stream that underpins the Brent crude contract.
Concerns that the shutdown could further delay August Forties cargoes, which had already suffered delays, helped support Brent prices.
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.
(Additional reporting by Lin Noueihed and Florence Tan; Editing by David Gregorio, Grant McCool and Diane Craft)