* Brent futures curve flattens as European demand falters
* TransCanada says Gulf Coast oil pipeline fill begins
* China trade data brightens outlook for global demand (Adds analyst comment, updates to settlement prices)
NEW YORK, Dec 9 (Reuters) - Brent crude fell 2 percent on Monday in reaction to well-supplied markets and limited demand from European refiners, narrowing the gap between the global and U.S. oil benchmarks to its slimmest in nearly a month.
Brent's premium to U.S. oil was further eroded by news that TransCanada Corp has begun filling its 700,000 barrel-per-day oil pipeline, which will transport crude from the Cushing, Oklahoma, storage hub to Gulf Coast refiners.
Comments by St. Louis Federal Reserve President James Bullard hinting that the Fed is focused on lifting its monetary easing program also pressured prices.
"Every time they come out and change their message, even at the margin, it moves prices," said Michael Weis, commodity analyst at Schneider Electric in Louisville, Kentucky. "The uncertainty behind when that's going to happen, and by how much, will drive the market."
Brent futures settled $2.22 per barrel lower at $109.39, falling below the 100-day moving average of $109.70 for the first time in a week.
U.S. RBOB gasoline and heating oil followed Brent lower. U.S. gasoline futures settled 1.9 percent lower at $2.6749 per gallon. U.S. heating oil futures settled 1.4 percent lower at $3.0143 per gallon.
U.S. crude oil prices bounced in a moderate range from higher to lower, ending the session 31 cents lower at $97.34, after trading as high as $97.97.
Traders who bet on rising prices on Friday were selling contracts to unwind trades on Monday, analysts said.
"There's been higher demand to get crude to the refineries to make distillates," said Bill Baruch, senior market strategist at iitrader.com in Chicago. "You're also seeing an unwinding of the spread now with this pipeline coming online. Longs are liquidating the spread."
Brent oil's premium to U.S. oil narrowed by $1.91 to settle at $12.05, its narrowest settlement since Nov. 12.
The Brent January futures contract premium to February touched a one-month low of 18 cents from a high of 46 cents on Friday, mirroring weakness in physical over-the-counter trades at a time of weaker European refinery demand, analysts said.
Markets were also brimming with supply, with Saudi Arabia's production little changed in November from the previous month and OPEC producers Iraq and Iran making it clear they have no interest in contributing to a collective cut in output should one be required next year.
U.S. oil production from the fastest developing shale plays was expected to rise by more than 50,000 barrels per day in January.
Losses were limited somewhat by signs of accelerating global growth in China, the world's second largest oil consumer. Chinese trade figures on Sunday showed exports well above forecasts in November. Crude imports by China were up 19.1 percent from the previous month on a daily basis.
Weather-related oil production losses provided some price support. North Sea oil producers cut output and moved staff from some platforms as a major storm blasted toward mainland Europe in what meteorologists warned could be the worst weather to hit the continent in years.
Cold weather also dented oil and gas production in the United States and could further crimp output in top crude-producing states such as Texas and North Dakota. (Additional reporting by Christopher Johnson in London and Manash Goswami and Jessica Jaganathan in Singapore; Editing by Anthony Barker, Dale Hudson, Meredith Mazzilli, Peter Galloway, and Bob Burgdorfer)