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UPDATE 7-Oil edges lower ahead of G20, OPEC meeting

Stephanie Kelly

* Worries about G20 meeting, U.S.-China trade war

* OPEC+ meets on Monday-Tuesday to set output policy

* Iraq says OPEC set for rollover, may discuss deeper curb

* U.S. crude inventories fall most since September 2016 (New throughout, updates prices, market activity and comments; changes byline, dateline, previous LONDON)

NEW YORK, June 27 (Reuters) - Oil prices edged lower on Thursday, pressured by worries about whether the G20 summit will produce a breakthrough on trade that could strengthen the global economy and boost oil demand.

Brent crude futures fell 18 cents, or 0.3%, to $66.31 a barrel by 11:30 a.m. EDT (1530 GMT). U.S. West Texas Intermediate (WTI) crude futures fell 13 cents, or 0.2%, to $59.25 a barrel.

U.S. President Donald Trump said on Wednesday a trade deal with Chinese President Xi Jinping was possible this weekend but he is prepared to impose U.S. tariffs on most remaining Chinese imports if the two countries don't agree.

"It's all about the G20," said Craig Erlam, analyst at OANDA. "It's clear that investors are a little cautious when it comes to this meeting, given how talks collapsed previously and the fighting talk we've since seen from both sides."

On Wednesday, oil jumped more than 2% after the latest U.S. petroleum supply report showed a larger-than-expected drop in crude stocks. Inventories fell 12.8 million barrels, exceeding the 2.5 million barrel drop analysts had expected.

"Despite these stunning numbers there are still many doom-and-gloom people that are down on the economy. That is why the oil market will take its cue from G20 headlines," Phil Flynn, an analyst at Price Futures Group in Chicago, said in a note.

Traders said follow-through buying was being crimped by uncertainty over whether there will be a trade breakthrough at the G20 that can boost oil demand, and by questions about continued output cuts by OPEC and its allies.

After the G20 summit ends on Saturday, the Organization of the Petroleum Exporting Countries and allies including Russia meet on Monday and Tuesday to discuss an extension of production cuts to support prices.

Iraq's oil minister said in London OPEC was expected to roll over the deal and discuss deepening the curbs. Iraq is the second country after Algeria to mention the idea of a bigger reduction.

"It has been effective to a certain level to minimize the glut in the market, but there are now ideas or calls for agreeing even more," Oil Minister Thamer Ghadhban said.

Elsewhere, the government of Canada's main crude-producing province, Alberta, eased crude oil production curtailments for August on Thursday, setting the limit at 3.74 million barrels per day, compared with 3.71 million bpd in July.

(Additional reporting by Alex Lawler in London and Aaron Sheldrick in Tokyo; Editing by David Gregorio and Jan Harvey)