The nation's money supply shot up by $5.1 billion in the week ended Aug. 5, with at least part of the rise caused by the huge loans taken out for the Conoco merger, the Federal Reserve said yesterday.

Bank loan demand for commerical and industrial loans was up by $3.69 billion in the week compared with a drop of $278 million the previous week, the New York Federal Reserve Bank reported. A spokesman said "it would seem likely that the loan takedowns for the Conoco merger would account for part of the rise in M1-B in the latest week," although he added that it would be hard to quantify.

Some congressmen criticized the big credit lines arranged by major companies during the fight for Conoco, saying that it could upset the Fed's money policy.

But despite the big jump in M1-B (which includes cash and checking accounts at banks and other financial institutions) in the latest week, this measure is still below its target growth range. In the four weeks ended Aug. 5, it averaged $429.9 billion, a 4.9 percent rate of decline from three months earlier. It totaled $433.7 billion in the latest week.

The Fed also reported a large increase of $3.4 billion in the narrower measure of money, M1-A, to $363.9 billion in the week.

The news of the big rises in money supply may upset financial markets next week, although recent declines have done little to bring interest rates down. Within minutes after the Federal Reserve released its money supply report yesterday, financial markets reacted with rises in short- and long-term interest rates.

Treasury Secretary Donald T. Regan recently suggested in a published interview that the Fed should ease slightly on money growth to bring M1-B growth up into its target range. Other administration officials have made no secret of their concern that interest rates remain so high. Reagan had forecast a sharp decline in rates once the economic program of tax and budget cuts was in place.

The concern has led to renewed vigor in the search for further spending cuts to reduce next year's projected federal deficit. The president of the American Bankers Association, representing 13,500 of the nation's banks, also called this week for more spending cuts to speed a decline in interest rates.

The Fed is determined not to repeat last year's mistake of boosting the money supply rapidly after a period of sharp declines. It therefore has kept money very tight despite high interest rates and a slowing economy.

Fed officials always caution about reading too much into one week's figures for the money supply. This is especially true this year because the introduction of negotiable order of withdrawal (NOW) accounts has distorted the money figures.