Investing.com - Crude oil futures were modestly higher during European morning hours on Thursday, as geopolitical tensions in the Middle East increased after Israel assassinated a senior Hamas commander on Wednesday.
Gains were limited as traders remained fixated on concerns over Greece’s debt woes and the fiscal outlook in the U.S.
Oil traders were also focusing on closely-watched weekly supply data on U.S. stockpiles of crude and refined products from the U.S. Energy Information Administration later in the day.
On the New York Mercantile Exchange, light sweet crude futures for delivery in January traded at USD86.81 a barrel during European morning trade, up 0.1% on the day.
Prices held in a tight trading range between USD86.56 a barrel, the daily low and a session high of USD86.89 a barrel.
New York-traded oil prices rose to a one-week high of USD87.04 a barrel on Wednesday after Israel killed Ahmed al-Jabari, the leader of Hamas’s military wing in an air strike in Gaza, according to the Israel Defense Forces.
But gains were limited as investors remained concerned over the looming “fiscal cliff” in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1.
Obama is set to meet with congressional leaders on Friday to discuss the country’s fiscal situation.
There are fears the U.S. economy will fall back into a recession, unless a divided Congress and the White House can work out a compromise before the January 1 deadline.
Oil traders were now looking ahead to weekly data from the U.S. government on oil supplies later in the day to gauge the strength of demand from the world’s largest oil consumer.
The report was expected to show that U.S. crude oil stockpiles rose by 1.9 million barrels last week to the highest level since July.
After markets closed Wednesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories rose by 1.35 million barrels last week, while gasoline stocks decreased by 0.1 million barrels.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
In the euro zone, official data showed that Germany's economy gross domestic product rose 0.2% in the third quarter, in line with expectations, following a 0.3% increase in the previous quarter.
A separate report showed that France's economy’s expanded 0.2% in the third quarter, beating the expected flat reading, following a contraction of 0.1% in the previous quarter.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for January delivery added 0.35% to trade at USD108.86 a barrel, with the spread between the Brent and crude contracts standing at USD22.05 a barrel.