Oil Up 5% As Dollar Falls On Worry Of Slow US Rate Hike
NEW YORK, March 18 (Reuters) - Oil prices jumped as much as 5 percent on Wednesday as the dollar fell after the Federal Reserve indicated it preferred a more gradual path to normalizing U.S. interest rates despite being open to the first rate hike in almost a decade.
Benchmark Brent oil saw choppy moves earlier while U.S. crude prices fell after inventories in the United States hit record highs for a 10th week.
The dollar's tumble on the Fed's latest policy statement changed the market's direction, however.
The Fed opened the door further for an interest rate hike as early as June, ending its pledge to be "patient" in normalizing monetary policy. But it also made it clear that it needs to see more gains in the labor market and price growth to raise rates.
The dollar fell against most major currencies after the statement. A weaker dollar raises the appeal of dollar-denominated commodities, including oil, for holders of other currencies.
Brent closed up $2.40, or 4.5 percent, at $55.91 a barrel. It had rallied more than $3 at one point, rebounding from an earlier drop of nearly $1.
U.S. crude settled up $1.20, or almost 3 percent, at $44.66 a barrel. It had fallen more than $1 in Wednesday's morning trade after the U.S. government said crude inventories rose 9.6 million barrels to a new record of 458.5 million barrels in the week ended March 13.
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