Investing.com - Crude oil futures declined on Thursday, one day after rallying sharply on the back of a broadly weaker U.S. dollar.
On the New York Mercantile Exchange, crude oil for delivery in April slumped $1.68, or 3.76%, to trade at $42.98 a barrel during European morning hours. The front-month April contract was due to expire at the end of Friday's trading session.
Meanwhile, the more actively traded May contract was down $1.29, or 2.77%, to hit $45.36 a barrel.
A day earlier, the front-month contract rallied $1.20, or 2.76%, while the May contract soared $1.46, or 3.23% as the U.S. dollar tumbled after the Federal Reserve downgraded its forecasts for growth and inflation and lowered its interest rate projections.
The Fed dropped a reference to being "patient" on the timing of rate hikes, but added that the change in its forward guidance did not mean it has decided on the timing for an initial rate increase.
"Just because we removed the word "patient" does not mean we will become impatient," Fed Chair Janet Yellen said at a post-meeting press conference.
Yellen also warned that the stronger dollar was acting as a drag on U.S. exports and was pushing down inflation.
The statement prompted investors to push back expectations on the timing and pace of future rate increases.
The U.S. dollar index plunged to three-week lows of 94.77 on Wednesday, before rebounding to trade at 99.39 early on Thursday.
Nymex oil prices fell to $42.03 on Wednesday, a level not seen since March 2009, after data showed that oil supplies in the U.S. rose to the highest level on record last week, exacerbating fears over a glut in supplies.
The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories rose by 9.6 million barrels last week to 458.5 million, the most in at least 80 years.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for May delivery declined 79 cents, or 1.41%, to trade at $55.12 a barrel.
London-traded Brent prices surged $2.40, or 4.49%, on Wednesday to end at $55.91 a barrel.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $9.76 a barrel, compared to $9.26 by close of trade on Wednesday.
Oil prices have fallen sharply in recent months as OPEC resisted calls to cut output, while the U.S. pumped at the fastest pace in more than three decades, creating a glut in global supplies.