Brent crude oil neared $110 on Thursday morning despite a strong dollar and traded at $109.87 at 10:48 GMT.
Optimism about demand growth in the US lent support to Brent prices after the nation's oil inventories unexpectedly dropped. CNBC reported that refinery utilization rate increased in the US, so the falling inventories suggests that there is a renewed demand.
However, gains from optimism in the US were mitigated by worries in Europe over the reopening of Cyprus' banks following its very unpopular bailout agreement. Eurozone lawmakers agreed to use large, uninsured accounts to raise funds and unlock the Cypriot aid package.
The nation's banks have been closed for nearly two weeks while lawmakers scrambled to put controls in place to keep account holders from withdrawing all of their money. However, the bailout plan, although unpopular, has served to add some stability to the region.
In Italy, the lack of progress in establishing a new government is starting to chip away at investor confidence. Elections at the end of February were inconclusive and left the candidates to argue over forming a coalition.
An auction on Wednesday showed that the nation's cost of borrowing over five years has risen to its highest level in five months, a sign that investors are still worried about the nation's lack of a stable government.
Looking forward, investors will be eyeing US economic data for further proof that the world's top economy is picking up. US initial jobless claims figures are due out later on Thursday, and many are expecting to see positive numbers.
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