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

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* Turkey, Syria fighting reinforces worry over Middle Eastsupply

* 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 anddateline, pvs LONDON)

By Robert Gibbons

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

Moscow accused Turkey of endangering Russian lives afterNATO-member Turkey on Wednesday forced a Syrian passenger planeto land and seized what it suspected was military equipmentbeing ferried from Russia to Syria and the embattled governmentof President Bashar al-Assad.

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

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

Brent November crude rose $1.09 to $115.42 a barrelby 12:35 p.m. EDT (1635 GMT), having reached $116, highest sinceprices reached $117.02 on Sept. 17. Brent's November contractexpires on Oct. 16.

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

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

Firmer refining margins and steep backwardation in thegasoil market, where prices are higher for prompt delivery thanfor later dates, pointed to firm demand going into the northernhemisphere winter.

"At current prices, the upcoming winter will be the mostexpensive winter ever for the consumers using heating oil," saidOlivier Jakob at Petromatrix in Switzerland, adding thatgasoline prices were also high.

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

More supportive data showing U.S. initial jobless claims attheir 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 fourdays after the head of the International Monetary Fund saidindebted euro zone economies should have more time to cut budgetdeficits, overshadowing a downgrade of Spain's credit rating.

A weaker dollar index can be supportive todollar-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 inLondon and Florence Tan in Singapore; Editing by Bob Burgdorfer)

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

Keywords: MARKETS OIL/