NEW YORK: Oil prices jumped as much as 5 percent yesterday as the dollar fell after the Federal Reserve indicated it preferred a more gradual path to normalizing US interest rates despite being open to the first rate hike in almost a decade.
Benchmark Brent oil saw choppy moves earlier while US 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 normalising 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.
Reuters
