Brent rises to $109 on Middle East tension

Brent crude climbed towards $109 a barrel on Tuesday as tension rose in the Middle East and oil stockpiles in top consumer the United States were expected to fall.

Washington told US citizens on Tuesday to depart from Yemen immediately due to the threat of "terrorist attacks".

The new measures followed a heightened security alert on Friday that forced the closure of Western embassies in Yemen and US missions across the Middle East and Africa.

"The Yemen headline pushed oil prices higher," said Christopher Bellew, an oil broker at Jefferies Bache.

"But there's big speculative length in crude oil. The market is looking strong now, but it's vulnerable to the downside," Mr Bellew said.

Brent crude was up 26 cents at $108.96 by 3:20 pm after slipping to $108.15 in earlier trade. US oil rose 44 cents to $107 a barrel.

Brent has risen nearly 10 per cent in six weeks, touching $110.09 on August 2, the highest since early April, in part due to worries over supply from major exporters such as Libya and Iraq.

Oil also strengthened on expectations that US crude and gasoline stockpiles fell last week.

A preliminary Reuters poll, ahead of weekly inventory reports from the American Petroleum Institute (API) and the US Energy Information Administration (EIA), forecast on average a drop in crude stocks of 700,000 barrels in the week ended August 2.

In the previous week, US crude inventories rose 431,000 barrels to about 365 million barrels.

Even though risk premiums have come off, concerns over the crisis in Syria engulfing the region continued to support prices. President Bashar al-Assad said crushing what he termed as "terrorists" must come before any political solution, dimming hopes of an international peace conference any time soon.

Copyright @ Thomson Reuters 2013