NEW YORK - Oil futures eked out a gain Wednesday after Federal Reserve officials reiterated plans to keep interest rates near zero for the next two years, a move seen as boosting the allure of commodities for investors.
Light, sweet crude for June delivery settled 57 cents, or 0.6%, higher at $104.12 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled 96 cents, or 0.8%, higher at $119.12 a barrel.
Futures ended modestly higher--after spending the session lurching between gains and losses--following the afternoon release of minutes from the Federal Reserve's Open Market Committee, which reaffirmed plans to keep short-term interest rates near zero through late 2014.
Many analysts say the Fed's long-standing accommodative monetary policy has buoyed commodities such as oil by weakening the dollar and reducing the appeal of assets tied to interest rates.
"The Fed again reiterated they're going to keep interest rates near zero, and we had a nice pop," said Matt Zeman, chief market strategist at Kingsview Financial. "You're seeing risk appetite returning to the marketplace today."
Thursday's gain was a modest one, however, and came in the face of several bearish reports for crude oil. Earlier in the day, the Department of Energy reported a bigger-than-expected build in U.S. oil inventories, sending Nymex crude falling to nearly $103 a barrel in intraday trading.
Weekly oil inventories rose 4 million barrels last week, according to the DOE's Energy Information Administration, coming in above analyst expectations. Market watchers were calling for a more modest build of 1.9 million barrels, according to a survey by Dow Jones Newswires.
"Everybody feels that there seems to be plenty of oil out there," said Tony Rosado, broker at GA Global Markets in New York.
The EIA also said gasoline stockpiles last week fell 2.2 million barrels, while stocks of distillates, including heating oil and diesel, fell 3.1 million barrels. Refinery runs rose just 0.1 percentage point to 84.7% of capacity.
Gasoline inventories were expected to fall 1 million barrels in the most recent week, according to the Dow Jones survey. Stocks of distillates, including heating oil and diesel, were seen rising 100,000 barrels, while refinery runs were seen rising 0.5 percentage point to 85.1% of capacity.
Also weighing on prices earlier in the session was a Bloomberg report that said Iran was considering a Russian proposal to halt an expansion of its nuclear program to avoid an EU embargo, set to take effect July 1.
Tensions with Iran have been a major factor keeping oil prices above $100 a barrel for the bulk of this year. The U.S. and Europe have been imposing increasingly stringent sanctions on Tehran to pressure its nuclear program, which Western countries fear is being used to develop a nuclear weapon. Iran says its program is for peaceful purposes.
Front-month May reformulated gasoline blendstock, or RBOB, settled 0.36 cent, or 0.1%, lower at $3.1557 a gallon. May heating oil settled 3.16 cents, or 1%, higher at $3.1611 a gallon.