Oil edges up on weaker dollar as Britain EU vote looms
Traders are also waiting for the release later in the day of official US stockpiles data, hoping for an idea about demand in the world’s top oil consumer, after an industry group said supplies had tumbled last week.
Yellen warned Tuesday the US economy faces “considerable uncertainty” from slower domestic activity and from a possible British vote to exit the EU, signalling that a hike in US interest rates may be some time off.
She said she wants the economy to be on a “favourable path” before the central bank raises borrowing costs, which sent the greenback tumbling.
A weaker dollar makes oil cheaper for anyone using other currencies.
Markets have been particularly volatile in the week leading up to Britain’s EU vote Thursday. While bookmakers say there is an 80 percent chance Britain will stick with the EU, opinion polls predict a dead heat, with about 10 percent of voters yet to decide which way to go.
“A UK vote to exit the European Union could have significant economic repercussions,” Yellen warned in a testimony to the Senate Banking Committee.
At about 0630 GMT Wednesday, US benchmark West Texas Intermediate for August delivery, a new contract, was up 40 cents, or 0.80 percent, at $50.25, while Brent gained 40 cents, or 0.79 percent, to $51.02.
Stephen Innes, senior trader at foreign exchange firm OANDA Asia Pacific, said oil prices “are being dictated by the US dollar movement”.
The US energy department is due to release its weekly stockpiles figures on Wednesday, a day after the American Petroleum Institute showed a larger than expected drop. The figures are pored over by traders hoping for a guide to demand in the crude market during the US driving season.