By Surabhi Sahu Crude oil futures rose in Asian trade Wednesday as hopes of an Israel-Palestinian truce dimmed, reigniting fears of supply risks from the Middle East. On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at $86.95 a barrel at 0634 GMT, up $0.20 in the Globex electronic session. January Brent crude on London's ICE Futures exchange rose $0.15 to $109.98 a barrel. Despite talk of a possible ceasefire on Tuesday, a deal between Israel and Palestinian militants still remains elusive, a Tokyo-based trader said, adding that oil prices could edge higher if Israel deployed ground forces in Gaza. He tipped resistance for the U.S. benchmark at $89.50/barrel today, close to its 50-day moving average. At present, the Israel-Hamas conflict isn't affecting physical oil supplies. If the conflict persists, neighboring oil producing nations could get drawn in and tensions in the region could flare, threatening oil supplies, a Singapore-based trader said. Demand side-fundamentals for oil are still tilted in a "bearish direction," Jim Ritterbusch at Ritterbusch & Associates said in a note Tuesday. Still, "we are keeping the low side of our expected range [for WTI prices] at the $84/bbl mark due to the chance of renewed flare-ups [in the Mideast] and what we see as a strong possibility that fiscal cliff issues will resurface," Mr. Ritterbusch said. Meanwhile, upbeat economic data from the U.S. and positive U.S. crude inventory data from the American Petroleum Institute late Tuesday also supported crude prices, a second Tokyo-based trader said. U.S. new home construction in October rose 3.6% from September to the highest level in more than four years, the Commerce Department said. In the week ended Friday, crude oil stocks fell by 1.924 million barrels and gasoline stocks declined by 4.809 million barrels, API said. Analysts surveyed by Dow Jones Newswires had predicted a stocks rise. The closely watched U.S. oil-inventory data from the Energy Information Administration is due late Wednesday. Any deviations from API figures will prompt market participants to adjust positions accordingly, traders said. Investors also await China's preliminary manufacturing data for November due Thursday and a decision to cut Greece's debt load when euro-zone finance ministers reconvene Monday, traders said. Nymex reformulated gasoline blendstock for December--the benchmark gasoline contract--rose 175 points to $2.7300 a gallon, while December heating oil traded at $3.0500, 108 points higher. ICE gasoil for December changed hands at $944.50 a metric ton, down $0.25 from Tuesday's settlement. Write to Surabhi Sahu at surabhi.sahu@dowjones.com

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