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UPDATE 7-Oil rises as Turkey-Syria tensions fuel supply concerns

* Turkey, Syria fighting reinforces worry over Middle East supply

* North Sea crude output set to fall in November * Coming Up: CFTC positions data 3:30 EDT Friday

(Recasts, updates prices, market activity; changes byline and dateline, pvs LONDON)

By Robert Gibbons

NEW YORK, Oct 11 (Reuters) - Oil prices rose on Thursday as tensions between Syria and Turkey escalate and maintenance curbs on North Sea output continue.

Moscow accused Turkey of endangering Russian lives after NATO-member Turkey on Wednesday forced a Syrian passenger plane to land and seized what it suspected was military equipment being ferried from Russia to Syria and the embattled government of President Bashar al-Assad.

Damascus said intercepting the Syrian Air plane was an act of piracy and the incident follows the previous warning by Turkey's chief of staff that Ankara would use greater force if shells from Syria continued to hit Turkish territory.

"The Syrian situation is heating up and there are fears about Turkey, a NATO member, retaliating and contagion in the region," said Bjarne Schieldrop, analyst at SEB in Oslo.

Brent November crude rose $1.09 to $115.42 a barrel by 12:35 p.m. EDT (1635 GMT), having reached $116, highest since prices reached $117.02 on Sept. 17. Brent's November contract expires on Oct. 16.

U.S. crude was up 74 cents at $91.99 a barrel, having swung from $91.09 to $92.94.

North Sea crude oil output from 12 production streams is set to fall by about 1 percent in November, according to Reuters' calculations, another factor supporting Brent prices.

Firmer refining margins and steep backwardation in the gasoil market, where prices are higher for prompt delivery than for later dates, pointed to firm demand going into the northern hemisphere winter.

"At current prices, the upcoming winter will be the most expensive winter ever for the consumers using heating oil," said Olivier Jakob at Petromatrix in Switzerland, adding that gasoline prices were also high.

Tempered gains for crude futures could be expected after U.S. government inventory data released on Thursday showed crude oil stocks rose more than forecasted, but a steep drop in distillate stocks and a less dramatic slip in gasoline stocks kept concerns about tight supplies of refined products in focus.

More supportive data showing U.S. initial jobless claims at their lowest in more than four years last week helped push U.S. equities on Wall Street higher.

The euro rose against the dollar for the first time in four days after the head of the International Monetary Fund said indebted euro zone economies should have more time to cut budget deficits, overshadowing a downgrade of Spain's credit rating.

A weaker dollar index can be supportive to dollar-denominated commodities like crude oil. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic on 24-hr Brent chart analysis Graphic on WTI-Brent spread ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

(Additional reporting by Simon Falush and Alice Baghdjian in London and Florence Tan in Singapore; Editing by Bob Burgdorfer)

((robert.gibbons@thomsonreuters.com)(+1 646 223 6059)(Reuters Messaging: robert.gibbons.reuters.com@reuters.net))

Keywords: MARKETS OIL/