Oil prices up on Friday over weakening dollar after Fed decision to leave interest rates unchanged

By Duygu Alhan

Oil prices increased in early trade on Friday due to a weaker dollar as a result of the US Federal Reserve's (Fed) decision to leave interest rates constant, while alleviating concerns for financial sector investors.

International benchmark crude Brent traded at $87.01 per barrel at 10.17 a.m. local time (0717 GMT), a 0.18% rise from the closing price of $86.85 a barrel in the previous trading session on Thursday.

The American benchmark West Texas Intermediate (WTI) traded at the same time at $82.84 per barrel, up 0.46% from Thursday's close of $82.46 per barrel.

The Fed's decision to hold the federal funds rate steady between the 5.25% and 5.5% target range prevented a widely anticipated interest rate hike, causing the dollar to weaken in support of higher oil prices.

Despite the fact that the Fed has avoided raising interest rates now for the third time, having done so previously in June and September, the federal funds rate remains at its highest level in 22 years.

Meanwhile, supply concerns caused by the conflict between Israel and Palestine continue to impact oil prices.

The Israeli army implied on Thursday that there will not be a cease-fire for the time being, which raised investor concerns about secure supplies and put upward pressure on oil prices.

"The army has completed the siege of Gaza City, which is considered the epicenter of Hamas," Israeli army spokesperson Daniel Hagari said in a news conference aired by the Israeli Broadcasting Authority.

"A cease-fire is not on the table at this time," Hagari stressed.

However, the Energy Information Administration (EIA) reported on Wednesday that US commercial crude oil stocks rose by 0.2% during the week ending October 27, which limited upward price pressures.

The data indicated that US inventories rose by around 800,000 barrels to 421.9 million barrels, compared to the American Petroleum Institute's expectation of a rise of around 1.3 million barrels.