UPDATE 3-Oil climbs further above $109 on Ukraine tensions

* Obama says more sanctions "teed up" against Russia

* U.S. crude oil inventories rise to highest on record

* Output at key North Sea field cut, Libyan supply mostly offline

(Updates prices, changes dateline from SINGAPORE)

LONDON, April 24 (Reuters) - Oil rose further above $109 a barrel on Thursday as disagreement between Russia and the West over Ukraine added to supply concerns, although record U.S. crude inventories kept gains in check.

U.S. President Barack Obama said more sanctions were "teed up" against Russia if it fails to deliver on promises made in an agreement in Geneva last week to ease tensions in Ukraine.

Global benchmark Brent crude was up 17 cents at $109.28 by 0816 GMT, after settling 16 cents lower on Wednesday. U.S. crude rose 27 cents to $101.71 a barrel.

"The escalating Ukraine conflict is fuelling fears about supply outages," said Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt.

NATO says Russia has built up a force of about 40,000 troops on its border with Ukraine. Moscow says some are stationed there permanently, while others have been deployed as a precaution to protect Russia from the instability in Ukraine.

A rise in crude oil stockpiles in the United States to the highest since records began in 1982, as reported in government data on Wednesday, kept a lid on prices. Brent has still gained 5 percent from a five-month low of $103.95 reached on April 2.

A further escalation over Ukraine could lead to damaging economic sanctions, raising the risk of a disruption in Russian gas supplies on which Europe depends. Russia is also one of the world's top oil producers.

"The immediate demand-supply dynamic is negative, but Ukraine is the wildcard that is stopping the market from declining further," said Ric Spooner, chief analyst at CMC Markets.

"For the near term, I see markets largely neutral, trading in a range with a downward bias."

Disruption to output in Libya, and a supply cutback at the largest British North Sea oilfield, also supported Brent.

Libya's production was around 220,000 barrels per day (bpd) on Tuesday, a sign that an April 6 agreement between rebels and the government to reopen occupied ports has yet to result in any significant output recovery.

Supply has been cut at the North Sea Buzzard oilfield by about 50,000 bpd for four days, a trade source said on Wednesday. The 200,000-bpd field is the biggest contributor to Forties, one of the four crude streams underpinning Brent.

(Additional reporting by Manash Goswami in Singapore; Editing by Dale Hudson)