TORONTO - The Canadian dollar was higher Wednesday as the price of oil climbed amid a report of lower than expected stockpiles in the United States.
The loonie gained 0.31 of a cent to 92.02 cents US.
The July crude contract on the New York Mercantile Exchange advanced five cents to US$104.40 a barrel amid a report from the U.S. Energy Department that oil supplies fell by 2.6 million barrels in the week ended June 6, more than double the 1.2 million barrels analysts expected.
Meanwhile, the Organization for Petroleum Exporting Countries, which is meeting in Vienna, is expected to keep its output target of 30 million barrels a day unchanged.
The gain also came amid news that a group of al-Qaida inspired militants overran much of the Iraqi city of Mosul on Tuesday. Mosul is in an area that has been but is not currently a major gateway for Iraqi oil.
Also adding to upward pressure on oil prices are the faltering talks on solving Ukraine's gas payments to Russia as well as global indicators suggesting a pickup in growth in the second half of the year.
"Oil has kept our loonie from falling below the 90 cent mark," said Allan Small, a senior adviser with Holliswealth.
"If you look at the economic data right now, Canada is definitely, I don't know if you want to say slowing down, but not growing at a pace we want to see. I think our loonie could possibly fall to the 90 cent mark going forward," Small said.
Meanwhile, the World Bank has said it's planning on cutting its 2014 growth forecast to 2.8 per cent from 3.2 per cent, citing a bitter American winter and the political crisis in Ukraine. However, recent data such as solid U.S. hiring and stronger Chinese exports in May suggest prospects for growth in the second half of the year aren't all pessimistic.
Scotiabank's Camilla Sutton said the loonie and U.S. dollar aren't expected to make any major moves Wednesday.
"The USDCAD is trading in a tight range, lacking a fundamental catalyst to shift it in either direction," Sutton, chief FX strategist, managing director, Scotiabank Global Banking and Markets, wrote in a note.
"Today there is no data in North America and no Fed (Federal Reserve) or BoC (Bank of Canada) speakers, leaving USDCAD likely in a quiet range," she said, referring to the loonie and the U.S. dollar.
In other commodities, August gold bullion gained $1.10 to US$1,261.20 an ounce, while July copper declined by a penny to US$3.04 a pound.
Follow @LindaNguyenTO on Twitter.