Oil edges up on weaker dollar

11:15, June 03, 2011      

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U.S. crude oil price edged up on Thursday as the dollar weakened against a basket of currencies on Moody's Investors Service's warning about U.S. debt.

In a statement, Moody's said if there is no progress in increasing the debt limit in coming weeks, it expects to place the U.S. government's rating under review for possible downgrade, due to the very small but rising risk of a short-lived default.

This warning, along with the weaker-than-expected initial jobless claims data, caused the dollar to weaken against most major currencies.

In Europe, the debt-burdened Greece agreed to a new 6.4-billion- euro deficit cut plan, which helped the euro rally more than 1 percent against the dollar.

The dollar index that tracks the dollar performance against a basket of currencies dipped about 0.5 percent. Weaker dollar lifted crude prices.

But on Thursday, there were sources saying the Organization of Petroleum Exporting Countries (OPEC) could raise output by up to 1. 5 million barrels per day at its meeting on June 8 to help bring down the high fuel prices.

And according to the report of U.S. Energy Information Administration, the U.S. crude inventories rose 2.9 million barrels in the week ended May 27. More U.S. crude supply pressured the prices.

Light, sweet crude for July delivery rose moderately 11 cents, or 0.11 percent to settle at 100.40 dollars a barrel on the New York Mercantile Exchange. In London, Brent crude for July delivery also gained and last traded above 115 dollars a barrel.

Source: Xinhua
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