Oil prices surge as Fed stays cautious on rates

World oil prices jumped on Wednesday as a cautious Federal Reserve statement offset data showing a big increase in US crude inventories. US benchmark West Texas Intermediate gained USD 1.20 to USD 44.66 a barrel after earlier falling to a new six-year low. European benchmark Brent oil for May delivery advanced USD 2.40 to USD 55.91 a barrel.

Crude prices surged after the Fed's statement, which noted that US economic growth had "moderated somewhat" since January. The Fed dropped a pledge to remain "patient" on raising interest rates, signaling a midyear federal funds rate hike remained possible after keeping it at the zero level for more than six years.

But other language in the Fed's statement emphasised that the central bank was in no rush to hike rates, sending the dollar lower.

"It looks like there's a little hesitation on when the Fed is going to raise rates," said Gene McGillian, a broker and analyst at Tradition Energy. McGillian noted that the strong dollar has been a factor in the long decline in oil prices, which have fallen about 60 percent since last June. Oil is traded in dollars.