* Heightened tension over Ukraine supports market
* Production at Libya's El Sharara oilfield halts
* IEA says plenty of oil from Iraq, other producers
(Adds analyst commentary, CFTC data; Updates settlement prices)
By Elizabeth Dilts
NEW YORK, March 14 Brent crude oil rose by more
than $1 on Friday as traders worried about the war of words
between Moscow and the West might escalate sharply this weekend
if Crimea holds its referendum on joining Russia.
U.S. crude oil also rose, though not by as much, with gains
curbed by large domestic supply builds and lower demand in the
U.S. and China, the largest and second-largest oil consumers.
Traders covered short positions ahead of the vote being held
on Sunday by pro-Moscow authorities is to determine if Crimea
will join Russia, analysts said.
Moscow shipped more troops and armor into Crimea on Friday
as the European Union prepared to impose travel bans and freeze
the assets of dozens of Russians involved in Russia's gradual
takeover of Crimea on Monday.
The conflict has underpinned global oil markets as traders
worry it will lead to a disruption of oil supplies from Russia,
one of the world's biggest oil producers.
"The referendum this weekend is raising the geopolitical
risk premium and people who have been short are looking to
scrape profits out of the weekend," said Gene McGillian, analyst
at consulting firm Tradition Energy in Stamford, Connecticut.
The Brent crude oil contract for April delivery,
which expired Friday, settled $1.18 higher at $108.57. The May
contract, which will become the front month contract on Monday,
settled $1.29 higher at $108.21.
Despite Friday's rally, Brent ended lower for the third
U.S. crude settled 69 cents higher at $98.89 a
barrel, but closed for the week at its lowest point since the
end of January.
The Brent-WTI spread CL-LCO1=R again touched wider than
$10 on Friday and on Wednesday, a range it has not traded in
since Jan. 29. The spread was not able to hold and settled 49
cents wider Friday at $9.68.
Production at Libya's 340,000 barrels per day El Sharara
oilfield halted due to protests less than a week after it
reopened, also lending Brent support.
The International Energy Agency said on Friday a surge in
supply from Iraq and other oil producers should be more than
sufficient to meet growing demand this year.
The IEA said Iraq's oil output rose by 530,000 barrels per
day in February to 3.62 million bpd, the highest since 1979.
Slowing Chinese economic growth has raised concerns about
oil demand in the world's second largest consumer.
Solid U.S. retail sales and labor market data this week
raised some optimism about the global economy.
Still, U.S. crude lost nearly 4 percent this week in its
steepest fall since early January, after the U.S. government
surprised markets on Wednesday by announcing a test release of 5
million barrels from its strategic petroleum reserve.
Weekly inventory data also showed domestic crude oil
stockpiles rose by three times as much as analysts expected.
Given the poor fundamental outlook in the week to Tuesday,
money managers cut their net long U.S. crude futures and options
positions, U.S. Commodity Futures Trading Commission (CFTC) data
(Additional reporting by Jacob Gronholt-Pedersen in Singapore;
editing by William Hardy, Keiron Henderson, Tom Brown and Amanda