* U.S. consumer sentiment at highest in more than seven years
* Saudi Arabia, Kuwait stop production at Khafji oilfield
* Uncertainty over who controls Libya’s oil
By Jane Xie
SINGAPORE, Oct 20 (Reuters) - Brent crude futures edged higher on Monday, holding on to gains scored in the previous session that took it above $86 a barrel after robust U.S. data buoyed global financial markets, with a cut in Saudi-Kuwait oil output providing further support.
Abundant global oil supplies coupled with a gloomy economic outlook from Europe to China had pushed Brent to its lowest since 2010 last week, consolidating a loss of more than 25 percent since June.
Prices recovered late last week as some investors covered short positions and Brent had risen another 8 cents to $86.24 by 0332 GMT. On Friday the price had risen 2 percent, its biggest gain in more than a month.
U.S. crude gained 38 cents to $83.13 a barrel.
A positive U.S. consumer sentiment index brought cheer to Asia’s equity markets on Monday, although the impact on oil may be short-lived.
“Oil markets are following the positive sentiment from equity markets,” said Ric Spooner, chief analyst at CMC Markets in Sydney.
“But it is a short-term reaction and the upside is limited as, barring any geopolitical risks, nothing much has changed in terms of fundamentals.”
The International Energy Agency cut its demand growth forecast for oil in 2015 as the global economic outlook remains weak, indicating lower oil demand.
Investors’ hopes that OPEC producers would cut output to support prices amid an unrelenting shale oil boom in North America have been dashed by comments and signals from Saudi Arabia, Kuwait and Iran.
However, production has been halted temporarily at the Saudi-Kuwait Khafji oilfield, which has a production of 280,000-300,000 barrels per day (bpd), just over 2 percent of Saudi Arabia’s total output capacity.
“I don’t think it will have a huge impact by changing any overall supply-demand balance, which is still a weak outlook,” Spooner said.
“But it does get people talking about Saudi and Kuwait - about not being unhappy to take some barrels off.”
Still, investors are keeping an eye on any disruption to oil supply from geopolitical developments.
“The market is at a level where it is vulnerable to anything that is of a real threat to production,” Spooner said.
Elsewhere in the Middle East, tension mounted as Islamic State’s fight against Kurdish defenders further destabilised the Syrian border town of Kobani.
Traders are also concerned about the uncertainty over who is in charge of Libya’s vast oil reserves, after a self-styled government controlling Tripoli announced its oil policies.
Libya is currently producing 800,000 bpd of oil, down more than 40 percent from its peak of 1.4 million bpd in mid-2013. (Reporting By Jane Xie; Editing by Florence Tan and Alan Raybould)