NEW YORK (Reuters) - Brent crude held above $111 a barrel but below 2-1/2-year highs on Friday after Saudi Arabia, the worlds top oil exporter, raised output to calm fears of supply disruptions sparked by the uprising in Libya. Saudi Arabia has increased its output by more than 700,000 barrels per day, to a level exceeding 9 million bpd, a senior industry source familiar with Saudi production told. Trading was volatile as investors worried about the worsening situation in Libya, where oil outages have risen to as high as three quarters of its 1.6 million bpd output. Estimates of the supply loss could not be confirmed, however, as conditions remain unsettled and as rebels fought to wrest control of oilfields and terminals in the eastern section of the country from loyalists to leader Muammar Gaddafi. The disruptions fuelled Brent to almost $120 and U.S. crude to more than $103 on Thursday, with Brent shooting ahead as more of Libyas oil exports go to European refiners than to those in the United States. In London, Brent crude futures LCOc1 for April were up 14 cents at $111.50 a barrel on Friday, slipping from $113.91 hit earlier. They touched $119.79 on Thursday, the priciest since August 2008. U.S. crude futures CLc1 for April fell 8 cents to $97.20, off a $99.20 high touched earlier in the day. They hit $103.41 on Thursday, the highest since September 2008. Brents premium against U.S. crude CL-LCO=R rose above $15 a barrel from $14 on Thursday, when the Brent spread against U.S. benchmark West Texas Intermediate rocketed to a record $16.91. The petroleum markets look to have stabilized for now, at least relative to Thursdays spike in volatility, with signs that Saudi Arabia is responding to the supply disruption in Libya with some added output, said Tim Evans, energy analyst at Citi Futures Perspective in New York.