Brent oil futures ended at a fresh three-month high on Tuesday as strong U.S. retail sales, tighter North Sea crude supplies and speculation about economic stimulus outweighed weak euro zone growth data.

U.S. crude futures closed nearly 1 percent higher after data showed July retail sales rose for the first time in four months and producer prices climbed at the fastest pace in five months, both supportive signals for oil.

"I think the strength of the retail sales numbers and (gains in the) stock market have pushed up (oil) demand expectations," said Carl Larry, president of Oil Outlooks LLC in New York.

Oil futures gained ahead of U.S. inventory data forecast to show that crude oil stockpiles fell 1.7 million barrels in the week to Aug. 10, according to a Reuters poll.

In London, Brent for September delivery settled at $114.03 a barrel, rising 43 cents, after lengthy choppy trading on either side of unchanged. It was the highest settlement since May 3. The contract hit a session high of $114.30, below Monday's peak and a three-month intraday high of $115.11.

Benchmark London crude has risen nearly $8 this month to date, pushing the contract to near 73 on the 14-day Relative Strength Index, a technical signal that Brent the contract is overbought. The overbought signal developed as September Brent heads for expiration on Thursday, keeping investors cautious.

U.S. September crude settled at $93.43, gaining 70 cents, having hit a session high of $93.92 which was below Monday's high of $94.14.

"The market is looking overdone, which is why prices have not reached Monday's highs and there is some caution ahead of (weekly) inventory reports," said Mark Waggoner, president of Excel Futures in Bend, Oregon.

Brent's premium against U.S. crude edged down 27 cents to close at $20.60, from $20.87 on Monday.

Trading volumes were slim, with both Brent and U.S. crude about 20 percent below their respective 30-day averages, according to Reuters data.

Hopes that U.S. Federal Reserve Chairman Ben Bernanke would announce in a speech next month that the central bank will renew bond purchases for a third round of quantitative easing to support the economy kept oil futures supported.

"Investors are building in expectations of a QE3 ahead of the Jackson Hole speech by Bernanke," said Harry Tchilinguirian, an oil analyst at BNP Paribas in London.

China was also expected to step up its response to slowing growth after two rounds of interest rate cuts. Stimulus could come in the form of more infrastructure projects, which are seen raising demand for base metals and energy.

EURO ZONE ECONOMY SHRINKS

The 17-nation euro zone's economy contracted by 0.2 percent in the second quarter, data showed. Germany eked out 0.3 percent growth, slightly beating forecasts.

Whether a weakening economy will make Germany, the region's powerhouse, less likely to support rescue efforts for the broader euro zone is the big question, analysts said.

The euro remains supported by expectations that the European Central Bank will step in next month to reduce Spain's and Italy's steep borrowing costs after ECB President Mario Draghi's recent pledge to do all it takes to preserve the currency.

MIDDLE EAST TENSIONS, U.S. INVENTORIES

Oil investors were keeping a watch over tensions in the Middle East that could affect supplies.

They were also gearing for weekly U.S. inventory data, the first set of which will come from the industry group American Petroleum Institute after the oil markets close.

The forecast for lower crude inventories was accompanied by expectations that distillate and gasoline stocks also fell, the Reuters poll showed.

The more closely watched weekly report from the U.S. Energy Information Administration will be released Wednesday morning. (Additional reporting by Robert Gibbons and Janet McGurty in New York, Julia Payne in London, Manash Goswani in Singapore; Editing by Alden Bentley, Dale Hudson and Marguerita Choy)