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* Brent rises above $115
* Nymex nears $101.50
* Political unrest, weaker dollar drum up sentiment
By Seng Li Peng
SINGAPORE, May 31 (Reuters) - Brent rose above $115 a barrel on Tuesday as the dollar weakened on improved prospects of a bailout for debt-laden Greece, but oil remained on track for a fall in May, snapping a record eight-month winning streak.
The euro rose to three-week high against the dollar as the European Union raced to draft a second bailout package to release loans next month for Greece, and the Wall Street Journal reported that Germany could make concessions on efforts to put together a bailout. [ID:nL3E7GV011] [ID:nLDE74T0LG]
Brent and U.S. crude oil also drew support from reports that al-Qaeda had captured a town in Yemen amid widespread civil strife.
London Brent crude
NYMEX crude
Brent is set to fall more than 8 percent in May, the first monthly decline since August and the biggest in a year.
The leader of Yemen has refused to step down despite efforts by regional nations to broker a departure amid widespread protests, causing concern that unrest may pill into neighbouring states. [ID:nLDE74S0JS]
The United States and Saudi Arabia, both targets of attacks by Yemen-based al Qaeda in the Arabian Peninsula, are worried that growing chaos in the country is emboldening the group. [ID:nLDE74S0JS] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For timeline on Yemen troubles [ID:nLDE74H12F]
For an analysis on al Qaeda in Yemen [ID:nLDE74Q08P]
For more on Yemen unrest [ID:nLDE73R1DP]
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"The situation in Yemen seems to be deteriorating. The problem with Yemen is that it is next to Saudi Arabia, and it has been a source of terrorist attacks against Saudi Arabia," said Tony Nunan, a Tokyo-based risk manager at Mitsubishi Corp.
"As for Libya, unless there is a big break through such as (Muammar) Gadaffi stepping down, Libya is going to be out (of the oil export business) for a while. That would continue to be a bullish factor."
South African President Jacob Zuma made little headway towards brokering a Libya peace deal in talks with Muammar Gaddafi on Monday as eight army officers became the latest senior figures to break with the Libyan leader. [ID:nLDE74T0EM]
NATO warplanes have been raising the pace of their air strikes on Tripoli, with Gaddafi's Bab al-Aziziyah compound in the centre of the city being hit repeatedly.
DOLLAR
The dollar weakened more than 0.50 percent against a basket of currencies in early Asian trade.
"The dollar has been soft for a week of so, and a weaker dollar means stronger oil market," said Nunan.
This is because a weaker dollar makes commodities cheaper for those holding other currencies.
But the Japanese yen slipped just over 20 pips on Tuesday to 80.93 yen per dollar from around 80.70 yen after Moody's said it placed its rating on Japan on review for possible downgrade. [ID:nT9E7GN03Y]
Japan's April industrial output data showed signs of recovery in the first full data set since the March earthquake.
While output of 1.0 percent last month was below a median 2.8 percent forecast, manufacturers sharply increased their forecast for May. They projected May output would rise 8.0 percent compared with the previous 2.7 percent forecast, data from the Ministry of Economy, Trade and Industry showed on Tuesday. [ID:nL3E7GU0JC]
Companies expect the recovery to continue in June with production seen rising a further 7.7 percent, in a sign they are making headway in restoring supply chains and bringing back production lines idled by the disaster and power blackouts.
Separately, China said on Monday it would raise electricity prices for some users by about 3 percent, the first increase since 2009 as it tackles its worst power shortage in seven years. [ID:nL3E7GU10U]
(Editing by Ed Lane)