* Dollar jumps as Fed signals U.S. rate hike in June
* Brent retreats from Nov high near $50 a barrel
* Big U.S. gasoline, distillates draws supported oil earlier
(New throughout, updates market activity and comments to
settlement and after release of Federal Reserve minutes)
By Barani Krishnan
NEW YORK, May 18 (Reuters) - Oil prices retreated from 2016
highs and snapped a two-day rally on Wednesday, hurt by a surge
in the dollar after the U.S. Federal Reserve signalled it could
raise interest rates next month.
Brent and U.S. crude's West Texas Intermediate (WTI) futures
had advanced closer to $50 a barrel on Wednesday after large
gasoline and distillate drawdowns were announced by the U.S.
Energy Information Administration (EIA).
But minutes from the Fed's April 26-27 policy meeting,
released in late afternoon trading of oil, sent the dollar
.DXY rallying against a basket of currencies and the crude
benchmarks into negative territory. FRX/
The minutes showed the central bank was likely to raise
rates in June if economic data pointed to stronger
second-quarter growth and firmer inflation and employment.
"We think people really had a June rate hike off the table,"
said Tariq Zahir, crude trader and managing partner at Tyche
Capital Advisors in New York. "But with the Fed disputing that,
we could have a much stronger dollar from here, which is
typically bearish for oil and other commodities."
Brent LCOc1 settled down 35 cents at $48.93 a barrel.
Earlier, it came within 15 cents of striking the $50 target
coveted by oil bulls. That session's peak of $49.85 was the
highest for Brent since November.
WTI CLc1 closed down 12 cents at $48.19 a barrel after
reaching $48.95 - its highest level since mid-October.
U.S. gasoline stockpiles USOILG=ECI fell by 2.5 million
barrels last week, versus a draw of 150,000 barrels expected by
analysts in a Reuters poll.
Inventories of distillates USOILD=ECI , which include
diesel and heating oil, slumped by 3.2 million barrels, versus
expectations for a 642,000-barrel drop.
The draws took the market's attention from a crude build
USOILC=ECI of 1.3 million barrels, which analysts said should
have been bearish for crude prices. The Reuters poll forecast a
decrease of 2.8 million barrels in crude stocks last week.
Preliminary data on Tuesday from the American Petroleum
Institute, a trade group, showed a crude draw of 1.1 million
barrels. EIA/S API/S
Oil prices are up about 80 percent or more from 12-year lows
of around $27 for Brent in January and about $26 for WTI in
February. The rebound has been fueled by declining U.S. crude
output, a wildfire that has restricted Canadian oil exports to
the United States and outages in Libyan and Nigerian supply.
Some analysts worry the higher prices will lead to more
production and another major oil glut, similar to the kind that
forced prices down from highs above $100 a barrel in mid-2014.