Oil Pushes Higher On Dollar Drop

Oil prices were higher early on Thursday as the U.S. dollar fell following indications that interest rates will be cut this year, while Middle East tensions rose as Iran shot down a U.S. drone and U.S. inventories fell more than expected.

West Texas Intermediate crude for July delivery was last seen up US$1.88 to US$55.64 per barrel while August Brent crude rose US$1.72 to US$63.54.

The rise came as the U.S. dollar fell after the Federal Reserve’s Open Markets Committee ended a two day meeting without raising interest rates but signalled it is open to the possibility of future cuts. The dovish stance cooled the dollar, with the ICE dollar index last seen down 0.51 points to 96.61, pushing up the price of commodities priced in dollars.

Oil was also pushed higher on supply fears, with tensions in the Persian Gulf region again on the rise as Iran shot down a U.S. drone, Reuters reported.

A larger than expected drop in U.S. inventories also supported prices, with the Energy Information Administration on Wednesday saying supplies fell 3.1 million barrels last week, the first drop in six weeks.