* Germany says definitive solution unlikely at EU summit
* Coming Up: Sept U.S. industrial output at 1315 GMT
(Update prices)
By Ikuko Kurahone
LONDON, Oct 17 (Reuters) - Brent crude extended losses and
U.S. crude turned negative on Monday following remarks from
Germany that the forthcoming EU summit would not produce a
definitive solution to the euro zone debt crisis.
By 1114 GMT, Brent crude LCOc1 fell 73 cents to $111.50 a
barrel, reversing its earlier gain to as high as $113.86. U.S.
crude CLc1 was down 4 cents at $86.76, easing from its high at
$88.18.
North Sea benchmark Brent was leading the fall in key oil
futures prices in percentage terms.
At the weekend, in unusually direct language, finance
ministers and central bankers at a meeting of the Group of 20
major economies in Paris said they expected an Oct. 23 European
Union summit to "decisively address the current challenges
through a comprehensive plan".
However, German Finance Minister Wolfgang Schaeuble said on
Monday that European governments would not present an ultimate
solution for the sovereign debt crisis at the summit.
German Chancellor Angela Merkel has no concrete plans to
meet top bankers ahead of the EU summit, the chancellor's
spokesman, Steffen Seibert, said separately.
"Despite an improved macro outlook, a complete resolution to
Europe's sovereign debt issue is still far away," Morgan Stanley
said in its research note.
"Although the recent rally and ongoing supply issues suggest
crude fundamentals are strong, we believe that risks remain
skewed to the downside."
TIGHT MARKET
Supply of light crude has remained tight due to
underproduction in the North Sea, Nigeria and Libya, which has
just resumed oil exports after a civil war.
Oil inventories remain low in Europe and the United States
ahead of the winter heating season.
"While a rapid resumption of Libyan production remains a
wild card, until sustained exports are seen, the Brent and light
sweet crude market will remain sensitive to minor disruptions,"
analysts at JPMorgan said in a report.
Libyan government fighters battled on Sunday to subdue
pockets of resistance by pro-Muammar Gaddafi fighters, whose
refusal to abandon the ousted leader's hometown of Sirte is
delaying the country's move to democracy.
Brent's November contract, which expired on Friday, posted a
weekly gain of 8.3 percent, the largest since the week to Feb.
25. U.S. crude rose $2.57 to settle at $86.80 a barrel, the
highest since Sept. 20. It posted a weekly gain of 4.6 percent,
the biggest since the week to Oct. 7.
Speculators increased their net long positions in ICE Brent
crude oil LCOc1 and gas oil futures LGOc1 in the week to
Oct. 11, data published by the IntercontinentalExchange (ICE)
showed on Monday.
U.S. regulators this week will finalise their toughest
crackdown yet on volatile oil and metals markets, concluding
nearly four years of fierce debate over whether limits on
speculative trade can tame prices.
(Additional reporting by Manashi Goswami in Singapore, editing
by Jane Baird)
