UPDATE 6-Brent oil eases off six-month high as Syria action delayed
* Obama wants to punish Syria, but faces growing opposition
* Saudis to raise oil production by 1 million bpd - PIRA
* Libya output down to 250,000 bpd from prewar 1.4 mln bpd
(Updates prices and adds quotes and context. Changes byline/dateline, previous LONDON)
NEW YORK, Aug 29 (Reuters) - Brent crude oil eased off a six-month high on Thursday as traders sold contracts to book profits as fears of a U.S.-led military strike on Syria waned and after the market had its biggest two-day rally in more than 1-1/2 years.
Prices surged on fears that Western intervention in Syria would spur a wider conflict and destabilize the entire Middle East, which pumps a third of the world's oil. Since Monday, both Brent and U.S. oil benchmark West Texas Intermediate were up almost 8 percent from low to high mark.
The United States and its allies had been gearing up for an attack in response to reports that the Syrian government used poison gas against its civilians. But some U.S. lawmakers have waffled and said they want to wait for clear proof that the Syria has used chemical weapons before any retaliation.
The market got "a little out over its skis and the politicians did as well," said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. "Traders are taking some risk off the table and taking a wait and see approach."
Brent crude for October delivery was trading 65 cents lower at $115.96 per barrel at 12:08 p.m. EDT (1608 GMT), after trading as low at $114.94. It jumped more than 5 percent in the previous two sessions, posting its strongest two-day gain since January 2012.
U.S. crude oil for October delivery fell 90 cents to $109.20 per barrel.
Prices were still hovering near highs as supply disruptions in other parts of the Middle East supported the market.
Libya's crude output has fallen to around 250,000 barrels per day (bpd) from prewar levels of 1.6 million bpd as workers continue to strike, while Iraq's oil production has fallen by around 500,000 bpd due to maintenance and problems with local pipelines.
Saudi Arabia, OPEC's largest oil producer, stepped in and said it would pump a record 10.5 million bpd of crude on average throughout the third quarter, U.S. energy consultancy PIRA said.
The oil market was tighter in July with supply disruptions reaching 2.7 million bpd, the U.S. Energy Information Administration said in a report earlier this month.
U.S. oil prices for the month of July were at their highest level since March 2012, despite rising U.S. oil production.
Global oil consumption increased in the second quarter and is expected to grow by close to 1 million barrels per day in the third quarter, the EIA said.
OPEC's surplus capacity will increase to 3.6 million bpd in the fourth quarter, the agency said.
"The Saudis are concerned over demand destruction," Armstrong said. "They are going to do what they can to protect market share and this is the one tool they have at their disposal."
Brent's premium over U.S. crude futures <CL-LCO1=R> has risen to more than $6 a barrel, the widest since June, on expectations of increasing supply at the U.S. contract's delivery point in Cushing, Oklahoma.
The spread was last trading at $6.81 per barrel.
Before concerns over Syria roiled the market, traders were paying attention to when the U.S. Federal Reserve may begin scaling back its stimulus program, which has largely supported oil prices.
A spate of positive U.S. data may have the market thinking that the Fed will end the program sooner rather than later and that has some traders running for the exits before a policy change weighs on prices, Armstrong said.
U.S. gross domestic product in the second quarter grew by more than double the pace clocked in the previous three months, the Commerce Department said on Thursday, and jobless claims fell last week.
(Additional reporting by Christopher Johnson in London and Florence Tan in Singapore; editing by Jason Neely, Keiron Henderson and Peter Galloway)