UPDATE 6-Oil edges above $108 on U.S. economy, storm

Alex Lawler

* U.S. third-quarter growth at 2 percent annual rate

* Hurricane Sandy threatens U.S. after slamming Cuba

* Brent falls as low as $107.40, demand outlook weighs

(Recasts, updates prices)

LONDON, Oct 26 (Reuters) - Oil recovered from an earlier decline on Friday to trade above $108 a barrel as data showing pick-up in U.S. economic growth in the third quarter provided some relief from, but did not dispel, concerns about the demand outlook.

U.S. gross domestic product expanded at a 2.0 percent annual rate, the Commerce Department said. Economists polled by Reuters had expected a 1.9 percent growth pace in the third quarter.

Brent crude was up 5 cents to $108.54 a barrel by 1320 GMT, having fallen to as low as $107.40 earlier. It rose on Thursday after seven straight declines. U.S. oil slipped 15 cents to $85.90.

``Though U.S. GDP numbers surprised to the upside today, it was mainly through increased government spending,'' said Harry Tchilinguirian, head of commodity market strategy at BNP Paribas.

``More so than the GDP report, we think the market has been trying to establish a technical support from which to rebound after successive sessions of decline.''

Despite the U.S. figures, some disappointing third-quarter company earnings and Europe's debt crisis continued to weigh on oil prices. Rising U.S. inventories also pressured the market earlier this week.

``Commodities have come under renewed pressure,'' said Carsten Fritsch, analyst at Commerzbank in Frankfurt. ``The financial markets are clearly the dominant force at the moment rather than supply-side risks, of which there are still many.''

Brent was set to fall for a second week following last week's decline of nearly 4 percent, leaving prices little changed from the end of 2011. U.S. crude was heading for a weekly drop of over 4 percent.

Reinforcing investor concerns about the strength of the global economy, results from Apple and Amazon undershot expectations. On the oil patch, Norway's Statoil cut its 2013 output guidance.

While the demand outlook weighs on the market, supply-side problems have prevented a further decline for Brent. The European benchmark has gained support this week from production shutdowns in Nigeria and the North Sea.

Brent's 100-day moving average, at $107.67, remains a key level of technical support, Olivier Jakob, an analyst at Petromatrix, said. Any move below $106.80, Wednesday's intra-day low and the lowest since August, would be a bearish development.

Investors were keeping an eye on Hurricane Sandy, which pounded the Bahamas with winds and rain on Friday after killing 21 people across the Caribbean and was posing a threat to the U.S. East Coast.

Refined product prices were drawing support from the prospect of disruption to U.S. refining operations from the storm, in turn giving crude prices a lift, traders said.

(Additional reporting by Manash Goswami; editing by James Jukwey and Jane Baird)