October 11, 2012 / 5:26 AM / 5 years ago

UPDATE 9-Oil rises as Turkey-Syria tensions fuel supply concerns

* Turkey, Syria fighting reinforces worry over Middle East
    * North Sea crude output set to fall in November
    * Coming Up: CFTC positions data 3:30 EDT Friday

 (Recasts first paragaph, updates prices)
    By Robert Gibbons
    NEW YORK, Oct 11 (Reuters) - Oil prices rose on Thursday to
their highest levels in weeks as tensions between Syria and
Turkey escalated, while maintenance on North Sea oilfields
pushed the premium for Europe's Brent crude to another one-year
    Turkey was accused by Moscow of endangering Russian lives
after it 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.
    Brent November crude rose $1.38, or 1.21 percent, to
settle at $115.71, just off the day's high.
    U.S. November crude rose 82 cents, or 0.9 percent, to
settle at $92.07 a barrel, with the closely watched Brent/WTI
spread reaching its widest differential in a year at some $23.50
a barrel.
    Brent's premium to U.S. crude has risen nearly $8 a barrel
in the past three weeks, with the European benchmark squeezed by
declining North Sea output. Production from 12 streams is set to
fall by about 1 percent in November. 
    Oil prices are being whipsawed 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.
    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. 
    Distillate stockpiles dropped 3.18 million barrels, much
more than the consensus forecast of half a million barrels,
while gasoline stocks fell 534,000 barrels.
    U.S. heating oil futures churned higher, up more than
1 percent, while RBOB gasoline edged lower.
    "Nearby RBOB futures were the weak component of the complex
in today's trade amid a couple of refinery restarts and massive
liquidation out of long RBOB, short heating oil spread
positions," Jim Ritterbusch, president at Ritterbusch &
Associates, said in a note.
    More supportive data showing the fewest U.S. initial jobless
claims in more than four years last week helped push U.S.
equities higher on Wall Street. 

 (Additional reporting by Jonathan Leff in New York, Simon
Falush and Alice Baghdjian in London and Florence Tan in
Singapore; Editing by Bob Burgdorfer and Jim Marshall)
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