Investing.com -- U.S. crude futures hit a fresh yearly-high on Wednesday, eclipsing $45 a barrel for the first time on the calendar year, while closing near session-highs after the Federal Reserve held interest rates steady for the third consecutive meeting.
On the New York Mercantile Exchange, WTI crude for June delivery traded in a broad range between $43.77 and $45.59 a barrel, before settling at $45.16, up 1.12 or 2.54% on the session. At session-highs, the front month contract for U.S. crude surged above $45 for the first time since November 9. On the Intercontinental Exchange (ICE), brent crude for July delivery wavered between $45.45 and $47.19 a barrel, before closing at $46.81, up 1.23 or 2.72% on the session. North Brent Sea futures also cleared $47 a barrel for the first time since November 11. Both benchmarks of crude are up by approximately 40% since falling to 12-year lows in mid-February.
Crude futures rose sharply in overnight trading, briefly pared the gains following reports of a moderate build in U.S. crude stockpiles last week, before rallying late in the session due to the Fed's decision. On Wednesday morning, the U.S. Energy Information Administration (EIA) said in its Weekly Petroleum Status Report that domestic crude inventories rose by 2.0 million barrels for the week ending on April 22. While investors initially anticipated a build of 1.75 million barrels, market players adjusted their expectations after the American Petroleum Institute reported a surprising draw of 1.1 million barrels on Tuesday evening.
At 540.6 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. For the week, total motor gasoline inventories increased by 1.6 million barrels while distillate decreased by 1.7 million barrels. At the Cushing Oil Hub in Oklahoma, crude stockpiles increased by 1.75 million barrels last week. Stockpiles at Cushing, the nation's largest storage facility, are perilously close to reaching full capacity. U.S. production, meanwhile, fell by 15,000 barrels per day to 8.938 million bpd, dropping to fresh 18-month lows. U.S. output has declined in each of the last eight weeks and 13 of the last 14. Last June, U.S. output peaked above 9.6 million bpd, its highest level in 40 years.
Meanwhile, the Federal Open Market Committee left the target range on its benchmark Federal Funds Rate unchanged at a level between 0.25 and 0.50% on Wednesday in a relatively neutral monetary policy statement. In determining the size of future adjustments to the Fed Funds Rate, the FOMC said it will assess economic conditions, measures of labor market conditions, indications of inflationary pressures and expectations, as well as readings on financial and international developments. Since the FOMC last met in March, the central bank noted that economic activity has slowed in recent weeks.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, briefly turned positive following the Fed's release before falling back into negative territory for the session late on Tuesday afternoon at 94.43. The index remains near eight-month lows.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.