UPDATE 8-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)

By Robert Gibbons

NEW YORK, Oct 11 (Reuters) - Oil prices rose on Thursday as tensions between Syria and Turkey escalate, reinforcing concerns about risks to the region's supply, 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.

Oil prices are being buffeted by pressure from concerns about lower global fuel demand amid slowing economic growth, while the risk of supply disruptions in the Middle East and loading delays for crude from the North Sea provide support.

Brent November crude

rose $1.01 to $115.34 a barrel by 1:41 p.m. EDT (1741 GMT), having reached $116, highest since prices reached $117.02 on Sept. 17. Brent's November contract expires on Oct. 16.

U.S. November crude

was up 87 cents at $92.12 a barrel, having swung from $91.09 to $92.94. It reached $93.66 the previous session.

Brent's premium to U.S. crude increased and stayed above $23 a barrel, having reached $23.54 during Thursday's session. That was the highest in nearly a year, when Brent was priced $23.66 above U.S. crude intraday on Oct. 21, 2011.

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.

U.S. crude stocks rose 1.67 million barrels last week, the Energy Information Administration said in a report on Thursday, more than the 800,000-barrel build expected.

Distillate stockpiles dropped 3.18 million barrels, much more than the half million barrels consensus forecast, while gasoline stocks fell 534,000 barrels.

U.S. heating oil

futures churned higher, up more than 1 percent, while RBOB gasoline

edged lower.

"That big distillate draw may be producing an expectation that crude demand will go up as heating season approaches," said Mike Fitzpatrick, editor-in-chief at industry newsletter EnergyOverview in New York.

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/