* M. East tensions, North Sea supply crunch support prices
* US crude inventories fell 6 mln barrels last week-API
* Coming up: EIA oil data 10:30 a.m. EDT Wednesday
(Adds API data, additional detail paragraphs 8,10,14,16-18)
NEW YORK, Aug 21 (Reuters) - Oil prices rose on Tuesday as
hopes that the European Central Bank will act to contain the
region's debt crisis boosted crude futures and sent the euro to
a seven-week peak versus the dollar.
U.S. front-month September crude futures hit a three-month
high above $97 a barrel as the contract approached expiration.
Investors remained optimistic that the ECB could take action
to ease Spanish and Italian borrowing costs a day after the
central bank sought to quell speculation contained in a report
suggesting it was considering buying bonds of euro zone
countries if their borrowing costs breached a certain level.
An upcoming maintenance-related North Sea oil production
slide added support for oil, along with heightened tensions in
the Middle East as violence in Syria continues and Iran's
ongoing dispute with the West over Tehran's nuclear program.
Brent's sensitivity to North Sea production curbs and
potential Middle East supply disruptions has kept front-month
contracts priced above months further out, or in backwardation,
and provided the lift to bring prices back well above $100 a
barrel after settling at $89.23 on June 21.
On Tuesday, Brent October crude rose 94 cents to
settle at $114.64 a barrel, after reaching $115.58.
Brent hit a three-month peak at $117.03 last Thursday as its
September contract headed to expiration and went off the board
at $116.90 a barrel, the highest settlement since May 2.
Expiring U.S. September crude on Tuesday rose 71
cents to settle at $96.68 a barrel. The settlement and intraday
peak at $97.60 were the highest since May 10. The settlement was
just below the 200-day moving average of $96.73, after prices
tested above that level during the session.
U.S. October crude rose 58 cents to settle at $96.84
Total crude trading volume continued to experience a summer
lull, with Brent and U.S. crude turnover below their 30-day
averages and less than 500,000 lots traded.
"Optimism for a breakthrough in dealing with Greece is
propelling the risk appetite," Addison Armstrong, senior
director for market research at Tradition Energy said in a note.
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.
U.S. gasoline and heating oil rallied more
than 1 percent, adding more than 3 cents as recent refinery
problems keep supporting fuel prices.
Price strength for U.S. oil futures also came from concerns
about tropical weather threats, with Tropical Storm Issac headed
west toward the Caribbean.
Another low pressure system in the Atlantic is expected to
become a tropical cyclone in the next two days, the U.S.
National Hurricane Center said.
U.S. crude inventories fell 6 million barrels last week,
industry group American Petroleum Institute (API) said in its
weekly report on Tuesday, much more than expected.
Gasoline stocks rose 869,000 barrels, while distillate
stocks fell 1.0 million barrels, the API said.
The U.S. Energy Information Administration's inventory
report will follow on Wednesday at 10:30 a.m. EDT (1430 GMT).
Ahead of the weekly inventory reports, U.S. crude stocks had
been forecast to have fallen only 400,000 barrels, a Reuters
survey of analysts showed.
Distillate stocks had been expected to be up 1.0 million
barrels, with gasoline inventories down 700,000 barrels.
MIDDLE EAST TURMOIL
Turkey is investigating possible Syrian links to Monday's
deadly car bomb attack near its southeastern border,
highlighting concerns that the conflict might start to spill out
of Syria's borders.
Russian Foreign Minister Sergei Lavrov met China's top
diplomat and a Syrian government delegation on Tuesday, a day
after President Barack Obama said U.S. forces could intervene if
Syrian President Bashar al-Assad deployed chemical weapons
against rebels trying to topple him.
The U.N. nuclear agency and Iran will meet on Friday in
Vienna, the International Atomic Energy Agency confirmed on
Tuesday, for the first time since a June meeting produced no
progress towards answering questions about suspected nuclear
weapon research in the Islamic state.
(Additional reporting by Simon Falush in London and Ramya
Venugopal and Elizabeth Law in Singapore; Editing by Marguerita
Choy, David Gregorio, and Bob Burgdorfer)