Oil prices gained this week as a dovish U.S. Federal Reserve signaling an interest rate cut this month weakened the American dollar and increased crude demand around the world.
International benchmark Brent crude was trading at $66.67 per barrel at 1140 GMT, heading for a 3.6% weekly gain, after it opened Monday at $64.34 a barrel.
American benchmark West Texas Intermediate was at $60.34 a barrel at the same time, heading for a 4.4% increase, after starting the week at $57.77 per barrel.
U.S. Federal Reserve Chair Jerome Powell said Wednesday that the central bank would "act as appropriate" to sustain the current expansion in the American economy.
"Inflation has been running below the Federal Open Market Committee’s symmetric 2 percent objective, and crosscurrents, such as trade tensions and concerns about global growth, have been weighing on economic activity and the outlook," Powell said in his testimony before the U.S. House of Representatives Financial Services Committee.
Powell's remarks ensured the Fed would lower its benchmark interest rate after the conclusion of its two-day meeting on July 31.
Markets were estimating a 78.6% possibility that the bank would make a 25 basis points cut in the meeting, while also pricing in a 50 basis points cut with a 21.4% probability, according to CME Group's FedWatch Tool as of Friday.
The U.S. dollar index, which includes the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc, fell 0.4% on Wednesday after Powell's statements.
A weaker dollar, in turn, increases demand for oil around the world, since crude oil prices are indexed to the greenback.
In addition, as the summer driving season kicks off, gasoline consumption has increased.
Yet, the ongoing Sino-American trade dispute is weighing on the outlook for global economic growth and crude oil demand for the remaining of 2019.
By Ovunc Kutlu