Crude oil prices were up to start Thursday with gains as American dollar weakened against other currencies after the U.S. Federal Reserve adopted a dovish stance signaling a rate cut this year.
After its two-day meeting in Washington, the Fed kept its benchmark interest rate unchanged on Wednesday, but removed the word 'patient' from its statement, opening the door for a rate cut.
The Federal Open Market Committee 'will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective,' said the statement.
This suggested that the central bank could lower its benchmark interest rate by 25 basis points once, or at most twice, for the remaining of the year.
After the Fed decision, American dollar weakened against other currencies. The U.S. dollar index, which includes the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc, fell 0.5% on Wednesday.
In turn, oil prices, which are indexed to the U.S. dollar, showed more than 1% gains on Thursday, since weaker dollar increases demand for crude oil around the world.
International benchmark Brent crude was trading at $63.23 per barrel at 0620 GMT for a 1.5% gain after closing at $62.26 a barrel on the previous session.
American benchmark West Teas Intermediate was at $55.28 a barrel at the same time, posting a 1.2% increase, after ending the previous day at $54.63 per barrel.
By Ovunc Kutlu