Oil advanced from a five-month low as the U.S. dollar slid following the clearest sign yet that the U.S. Federal Reserve’s aggressive hiking campaign is over.

Brent topped US$75 a barrel — after climbing 1.4 per cent on Wednesday — as the Bloomberg Dollar Spot Index tumbled to its lowest since August, making commodities priced in the currency more attractive. West Texas Intermediate futures also rose by almost two per cent.

The Fed held interest rates steady for a third straight meeting on Wednesday. Chair Jerome Powell indicated that policymakers are now turning their focus to when to cut borrowing costs as inflation continues to drop. 

The meeting “might just mean that the latest move to the downside has been completed,” said Tamas Varga, an analyst at broker PVM Oil Associates Ltd. “Lowering borrowing costs should weaken the dollar against other currencies, which in turn, is encouraging for oil in the physical as well as in the futures markets.”

Meanwhile, the International Energy Agency sliced nearly 400,000 barrels a day from assessments of consumption growth for the final three months of this year, and continues to expect that growth rates will decelerate dramatically in 2024.

Brent is still down by more than 20 per cent from a high in late September on a surge in exports from non-OPEC countries and fears the demand outlook is worsening. In addition, the market is skeptical whether deeper voluntary supply cuts by the Organization of Petroleum Exporting Countries and its allies will be fully adhered to.

U.S. crude stockpiles have also declined for a second week, adding to the bullish case.

Prices:

• WTI for January delivery rose 1.9 per cent to $70.80 a barrel at 11:34 a.m. in London.
• Brent for February settlement advanced 1.9 per cent to $75.65 a barrel.