UPDATE 2-Chevron begins production at Frade field in Brazil

* Expects peak output of 90,000 barrels per day in 2011

* Crude to be exported, natural gas for use in Brazil

* Adds to bullish view of Chevron production outlook (Adds analyst comment and stock price)

RIO DE JANEIRO, June 23 (Reuters) - Chevron Corp (CVX.N: Quote, Profile, Research) announced on Tuesday a slightly early start of oil output at the Frade field off Brazil's coast, a $3 billion project that is expected to produce 90,000 barrels per day by 2011.

Crude oil from Frade, located some 230 miles (370 km) from Rio de Janeiro in 3,700 feet (1,128 meters) of water, will be shipped to world markets, while natural gas output is slated for domestic use in Brazil.

Frade's start, which had been due in the second half of 2009, will only add to a bullish view of Chevron's production outlook.

The company reported first-quarter output of 2.66 million barrels per day, versus its overall 2009 estimate of 2.63 million bpd, and has since announced first oil at its Tahiti field in the Gulf of Mexico.

"Look for a 2009 volume-target raise," Deutsche Bank analyst Paul Sankey wrote in a research note on Tuesday, after meeting with Chevron's management. Sankey has a "hold" rating on the stock due to the bank's bearish view of oil prices.

Shares of Chevron were up 1.2 percent at $66.56 in late New York trade, helped by a 2 percent rise in oil prices CLc1.