Oil price gains lose steam on rising dollar

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Oil prices rose Tuesday, supported by a threat of tougher sanctions against Russia and fierce fighting in Gaza, but lost steam as the dollar rallied against the euro, traders said.

Brent North Sea crude for delivery in September had edged up four cents to stand at $107.72 a barrel in late London deals, after trading up 64 cents around midday in the British capital.

US benchmark West Texas Intermediate (WTI) for August was 14 cents higher at $104.73 a barrel, pulling back from levels above $105 seen earlier in the day.

The euro slid to an eight-month low of $1.3459 on Tuesday as traders bet on a hike to US interest rates amid solid economic data from the world's biggest economy.

A stronger dollar tends to dampen demand for oil, which is priced in the US currency.

Crude futures won support, meanwhile, from global geopolitical tensions.

"The crises in Ukraine and the Gaza Strip, coupled with the risk of tougher economic sanctions against Russia, caused oil prices to climb," said Commerzbank (Xetra: CBK100 - news) analysts in a note to clients.

Brussels will produce a new wider list of Ukraine sanctions targets on Thursday, including Russian personalities and entities, EU foreign affairs chief Catherine Ashton announced on Tuesday.

The EU had decided to accelerate the "targeted measures agreed" at a leaders summit last week.

The downing of Malaysia Airlines flight MH17, allegedly by pro-Moscow rebels, has changed the situation completely and requires a much tougher response, said Britain's Philip Hammond.

It has also put Moscow's support of the separatists under more scrutiny than ever, amid allegations the plane was blasted out of the sky with a Russian-supplied missile system.

Russia is the world's second-biggest oil producer and there are fears that tougher sanctions could affect those supplies. Ukraine is also a major conduit for Russian gas exports to Europe.

Regarding the crude-rich Middle East, UN chief Ban Ki-moon on Tuesday demanded Israel and Hamas halt spiralling violence in Gaza in a bid to end bloodshed that has killed 620 Palestinians.

The Israeli military said two more of its soldiers had been killed in the fighting a day earlier, hiking the overall Israeli death toll to 29, among them 27 soldiers who died in the past four days.