By Sonali Paul

MELBOURNE (Reuters) - Oil prices fell about a $1 on Friday as the United States and allies considered releasing more oil from storage to cool markets and as traders faced higher costs for trading benchmark Brent futures.

Brent crude futures fell $1.07, or 0.9%, to $117.96 a barrel at 0053 GMT, after sliding 2.1% in the previous session.

U.S. West Texas Intermediate (WTI) crude futures fell $1.20, or 1.1%, to $111.14 a barrel, having dropped 2.3% in the previous session.

Despite the declines, both contracts were headed for their first weekly gains in three weeks, with Brent on track for a 10% jump and WTI on course for a 7% rise amid broader fears of a supply crunch due to sanctions on Russia, the world's second-largest crude exporter.

The punitive measures against Russia were imposed since its invasion of Ukraine last month, which Moscow calls a "special operation".

Supply concerns heightened after the Caspian Pipeline Consortium (CPC) terminal on Russia's Black Sea coast stopped exports on Wednesday after being damaged by a major storm.

Kazazkstan said on Thursday it expects the CPC to resume shipping crude within a month, but added it may reroute some oil towards tankers on the Caspian Sea and pipelines going to Russia's Samara and to China.

"It's tough to be short oil as U.S. inventories continue to dwindle, (and) as we are bound to have more supply shocks in the future," said Stephen Innes, managing partner at SPI Asset Management. 

Reflecting the market's volatility, the Intercontinental Exchange (NYSE:ICE) raised margin rates for Brent futures, with margins up 19% for the May contract as of Friday, marking the third rise this year and making it more expensive to trade.

Futures margin rates are hiked when markets are volatile, forcing traders to increase the deposit they hold at the exchange for each contract to prove they can deliver on their obligations.

Helping ease prices, the United States and its allies were discussing a possible further coordinated release of oil from storage, U.S. energy secretary Jennifer Granholm said on Thursday.

Separately, the United States was set to unveil a deal on Friday to supply Europe with more U.S. liquefied natural gas (LNG) for this year and next, sources familiar with the matter told Reuters.