Oil rises on Middle East tensions, weaker US dollar

Oil prices rose on Tuesday as tensions in the oil-rich Middle East escalated following the downing of a Russian-made fighter jet near the Syrian-Turkish border and a weaker US dollar provided incentive for investors to buy more oil.

Brent futures for January were up 67 cents to $45.50 a barrel at 0909 GMT, up 1.5% on Monday's close. West Texas Intermediate (WTI) crude was up 68 cents at $42.43.

"News of a military jet crashing in Syria is a reminder that there is still substantial risk in the Middle East," said Bjarne Schieldrop, the Olso-based chief commodities analyst at SEB.

Turkey said it had downed a Russian-made fighter jet near the Syrian border after it violated Ankara's airspace.

A weaker US dollar, easing from an eight-month peak against a basket of currencies, also lent support as investors found it cheaper to buy the dollar-denominated commodity.

They also awaited US crude stocks data, with expectations of a small increase.

US commercial crude oil stocks likely gained 1.1 million barrels for the week ended November 20, according to a preliminary Reuters survey of five analysts on Monday. A rise would mark a ninth consecutive weekly gain. 

"We still think that a low 40s NYMEX WTI is a floor from which the market can rally through the winter," said BNP Paribas said in a research note.

"Thereafter, the summer of 2016 presents down risk for oil prices as OPEC pursues its current policy, US production stabilises and Iran delivers more barrels to the market."

Saudi Arabia led a shift by the Organization of the Petroleum Exporting Countries (OPEC) in November 2014 to defend market share against competing supplies, rather than cut output to prop up prices.

The Saudi cabinet said on Monday it was ready to cooperate with OPEC and non-OPEC countries to achieve market stability, days before OPEC meets to review its policy.