Oil futures rise on dollar weakness

Investing.com - Crude oil futures rose on Thursday, as a broadly weaker U.S. dollar boosted the appeal of the commodity.

On the New York Mercantile Exchange, crude oil for August delivery tacked on 34 cents, or 0.56%, to trade at $60.67 a barrel during European morning hours.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.4% at 94.11, the lowest level since May 18.

Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.

The dollar weakened after the Federal Reserve lowered both its U.S. growth forecast and its interest-rate projections, prompting investors to push back expectations on the timing of an initial rate hike.

Fed Chair Janet Yellen said the central bank wanted to see “more decisive evidence” of sustained growth before raising rates, but acknowledged that the economy has “expanded moderately” after a weak first quarter.

Market players now looked ahead to the release of key U.S. data later in the session for further indications on the strength of the economy and the future path of monetary policy.

The U.S. is to release a string of data, including reports on consumer prices, initial jobless claims and manufacturing activity in the Philadelphia region.

On Wednesday, Nymex oil prices shed 12 cents, or 0.2%, to end at $60.33 after data showed that U.S. motor gasoline inventories rose by 0.5 million barrels last week, while distillate stockpiles increased by 0.1 million barrels.

Energy traders have been paying close attention to gasoline stockpiles in recent weeks as the U.S. driving season entered its peak gasoline demand period.

Total crude oil inventories fell by 2.7 million barrels last week to 467.9 million, compared to expectations for a drop of 1.7 million barrels to 468.9 million.

Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, increased by 112,000 barrels last week, compared to estimates for a drop of 850,000 barrels.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for August delivery jumped 67 cents, or 1.05%, to trade at $64.54 a barrel. On Wednesday, Brent futures inched up 17 cents, or 0.27%, to close at $63.87.

The spread between the Brent and the WTI crude contracts stood at $3.87 a barrel, compared to $3.54 by close of trade on Wednesday.

Meanwhile, investors continued to monitor developments surrounding talks between Greece and its international creditors, amid growing concerns that the country could default on its debt be forced out of the euro zone.

Europe wants Greece to make spending cuts in order to secure a deal that will unlock €7.2 billion in bailout funds and prevent Athens defaulting on its debts when its bailout expires at the end of the month.

European finance ministers were to hold talks in Brussels later Thursday, but expectations for a deal were not high. Failure to strike a deal would result in Greece defaulting on payments and exiting the euro zone.