RTTNews - Oil prices rallied to a six-month high above $62 per barrel on Wednesday, boosted by a second straight decline in weekly inventories. A weaker dollar also improved the hedge appeal of commodities.

July crude oil settled at $62.04 a barrel, up $1.94 on its first session as the front-month contract. This marked the best finish since Nov. 10. Prices reached as high as $62.26.

The Energy Information Administration reported U.S. commercial crude oil inventories fell by 2.1 million barrels in the week ended May 15. Experts had forecast a decline of about 1.5 million barrels of crude oil.

Gasoline inventories decreased by 4.3 million barrels last week. Distillate fuel inventories increased by 0.6 million barrels and propane/propylene inventories rose by 1.8 million barrels.

The U.S. dollar experienced sharp weakness versus other majors. The buck reached its lowest level since January 4 against the euro and its lowest mark since February 23 versus the sterling.

Treasury Secretary Timothy Geithner said that, although the economic outlook is getting brighter, it will take time for a full recovery. He faced lawmakers Wednesday, updating them on the progress of the $700 billion Troubled Asset Relief Program. He said that the financial system is stabilizing, and issued a timeline for further action by the Treasury.

The minutes of the Federal Open Market Committee released Wednesday revealed some debate within the policymaking arm of the Federal Reserve over whether or not to purchase additional treasury securities. Although the final decision was to stick with the $300 billion agreed on at the March meeting, in late April some officials thought that purchasing more could spur recovery.

Earlier in the day, the Mortgage Bankers Association revealed that its market index of mortgage application volume rose 2.3 percent on a seasonally adjusted basis for the week of May 15. The Market Composite Index was 915.9 compared to 895.6 in the previous week.

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