Oil prices have increased to nearly $40 per barrel as a weaker dollar stimulated interest in riskier assets.

Brent futures edged up 46 cents to $39.60 a barrel, while the US crude rose 61 cents and traded at $38.89, Reuters reported.

Falls were experienced by the dollar following comments by US Federal Reserve chair Janet Yellen about possible hikes in interest rate.

Yellen said in her speech said that the rates will be increased by the Fed even more slowly than initially expected.

"This caution is especially warranted."

Yellen said: "Given the risks to the outlook, I consider it appropriate for the federal open market committee (FOMC) to proceed cautiously in adjusting policy.

"This caution is especially warranted because, with the federal funds rate so low, the FOMC’s ability to use conventional monetary policy to respond to economic disturbances is asymmetric."

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Oil prices fell around 3% in the previous session after Kuwait and Saudi Arabia announced that they would resume production at the 300,000bpd Khafji field, which is jointly operated by them.

The International Energy Agency expects an increase in global stock to continue in 2016.

Data released by the American Petroleum Institute highlighted an increase in US crude stocks last week by 2.6 million barrels to 534.4 million barrels.

Image: The US crude rose 61 cents and traded at $38.89 a barrel. Photo: courtesy of anankkml/ FreeDigitalPhotos.net.