Oil rose on Tuesday on hopes a strategy being drawn up by the European Central Bank would help tackle the euro zone debt crisis, and was supported by ongoing tension in the Middle East and tight North Sea supply.
Some investors were optimistic that the ECB could take strong action to ease Spanish and Italian borrowing costs, even though it poured cold water on a report suggesting it was considering buying bonds of euro zone countries if their borrowing costs breached a certain level.
Greek Prime Minister Antonis Samaras will meet German Chancellor Angela Merkel, French President Francois Hollande and Eurogroup chief Jean-Claude Juncker this week to try to secure more funding from the European Union, International Monetary Fund and ECB, despite falling behind on its targets to cut debt.
Brent crude oil rose $1.45 to $115.15 a barrel at 1313 GMT, and has jumped from below $90 towards the end of June, propelled by maintenance in the North Sea and increased fear of military conflict between Iran and Israel.
Traders said that possible disruption to supply from severe weather was also a factor pushing up crude prices. A low pressure system located off the northeastern coast of Mexico continues to have a 30 percent chance of becoming a tropical cyclone over the next couple of days as it drifts westward, the U.S. National Hurricane Center said.
Trading volumes were thin, and illustrating investors' lack of conviction, open positions were at around their lowest since April, at 1.14 million. This compares to a peak at almost 1.3 million in May.
Analysts think there is scope for further strength in the short term, but potential for easing in coming months.
"There's a much tighter market in the second half of the year than there was in the first, and prices could gain more until the end of September," said Filip Petersson, analyst at SEB in Stockholm.
"However ... the North Sea maintenance problems will be resolved after that..."
U.S. crude added $1.58 cents to $97.45 per barrel.
MIDDLE EAST VIOLENCE
Oil prices remained underpinned by supply concerns triggered by escalating conflicts in Syria and Yemen as well as Iran's dispute with Israel, the United States and Europe, which has led to an embargo on Tehran's crude shipments.
Meanwhile, in Lebanon's northern city of Tripoli two people were killed and more than 60 wounded in clashes between Sunni Muslims and Alawites in another spillover from the war in neighbouring Syria, security and medical sources said on Tuesday.
Forces loyal to Syrian leader Bashar al-Assad attacked a rebel-held town near the Turkish border, while U.S. President Barack Obama warned that U.S. forces could move against Assad if he deploys his chemical weapons against rebels trying to overthrow him. .
Yemen LNG said on Tuesday that an explosion caused by sabotage had hit a gas pipeline feeding the country's only liquefied natural gas (LNG) export terminal.
Yemen's oil and gas pipelines have been repeatedly sabotaged since anti-government protests created a power vacuum in 2011 that armed groups have exploited, causing fuel shortages and slashing export earnings for the country.
Iran's crude exports dropped to about 1.1 million barrels per day in June and July from more than 2 million bpd at the start of the year, sources have said.
Traders are also awaiting the weekly U.S. inventory data expected on Tuesday and Wednesday.
Crude oil stockpiles likely rose by 100,000 barrels in the week to Aug. 17 on higher imports and lower refinery runs, according to a Reuters poll of six analysts, with three expecting a build and three projecting a drawdown.ž