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UPDATE 2-Brent hovers above $115, eyes best week in two months

Friday, 12 Oct 2012 | 2:47 AM ET

* Turkey-Syria tensions, lower N.Sea output support

* WTI-Brent spread at widest in a year

* BP to export U.S. crude to Canada, Shell seeks permit

* Coming up: China commodity imports on Oct. 13

(Updates prices) By Florence Tan

SINGAPORE, Oct 12 (Reuters) - Brent crude held above $115 a barrel on Friday, trading near four-week highs and on course for its biggest weekly gain in two months, supported by tensions between Turkey and Syria, lower output at North Sea oilfields and upbeat U.S. data.

U.S. jobless claims last week fell to the lowest level in more than four years, brightening the economic outlook for the world's largest oil consumer after forecasts of slower global growth from the IMF and World Bank earlier this week.

Brent November crude had eased 25 cents to $115.46 a barrel by 0637 GMT, but was up more than 3 percent for the week so far, its biggest weekly gain since August.

U.S. crude was up 18 cents at $92.25, and set to post its first weekly gain in four weeks.

The price spread between the two benchmarks is at its widest in a year as supply risks spurred Brent prices.

"Crude is responding positively to the U.S. economic data and ongoing tensions in the Middle East are adding to supply concerns," said Tim Waterer, a senior trader at CMC Global Markets in Sydney.

Turkey grounded a Syrian plane on Thursday, ratcheting up tensions between the two countries that could spread in the Middle East, sparking fears of potential oil supply disruption from the region.

"Even though Syria and Turkey do not produce a lot of oil, market participants are worried that tensions could spread to some of the major producers," ANZ analysts said in a note.

The port of Ceyhan, through which 400,000 barrels per day of Iraqi crude flows, is located south of Turkey.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic on WTI-Brent spread Graphic on 24-hr Brent chart analysis ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Maintenance at North Sea oilfields has also reduced output and supported Brent prices.

In the United States, crude oil stocks rose 1.67 million barrels last week, twice as much as expected, but a steep drop in distillate stocks and a less dramatic slip in gasoline stocks kept concerns about tight fuel supplies in focus.

Oil major BP Plc has secured U.S. government permission to ship U.S. crude oil to Canada, and Royal Dutch Shell has applied for an export license, as rising production in the world's top oil consumer upends global energy flows.

"This will significantly alter the oil market dynamics in the coming years as U.S. crude imports are expected to decline and exports to rise," said Ryoma Furumi, a commodity sales manager at Newedge Japan.

"If exports start rolling out in full force, WTI could regain its ground against Brent."

(Editing by Manolo Serapio Jr. and Miral Fahmy)

((Florence.Tan@thomsonreuters.com)(+65 6870 3497)(Reuters Messaging: florence.tan.thomsonreuters.com@reuters.net))

Keywords: MARKETS OIL/

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