Oil rises on ECB hopes

NEW YORK - Crude oil prices rose and hit three- month highs on Tuesday as investors hoped that the European Central Bank would act to contain the region's debt crisis.

The Bundesbank, Germany's central bank, has expressed opposition to ECB's bonds purchase plan, but investors were still hoping ECB would adopt more measures to assist some member states' economies.

Greek Prime Minister Antonis Samaras will meet euro-zone officials late this week to try to secure more funding from the European Union, International Monetary Fund and ECB.

The euro was also bolstered by the expectation and hit its highest level against the dollar since early July. A weaker dollar also lifted the dollar-denominated crude.

The US Federal Reserve started a two-day meeting on Tuesday, re-fueling hopes among investors for another round of quantitative easing. Analysts said as long as there were hopes for monetary boosting policies, oil would see gains.

Uncertainties lingered on the supply front.  The output reduction in the North Sea and unrest in the Middle East kept nerving the investors.

The Energy Information Administration is scheduled to release weekly inventory data on Wednesday, which was expected to show a moderate rise.

Light, sweet crude for September delivery gained 71 cents, or 0. 74 percent, to settle 96.68 dollars a barrel on the New York Mercantile Exchange, the highest level since May 15.  The September contract expired at the close of the session. The most actively traded October-delivery contract rose 58 cents, or 0.6 percent, to close at 96.84 dollars a barrel.

London, Brent crude for October delivery rose 94 cents, or 0.83 percent, to close at 114.04 dollars a barrel.