* Brent up almost 75 pct from end of January
* Crude rally overdone, could aggravate glut -traders
* U.S. crude stocks hit record highs above 540 mln bbls
* Fed appears in no rush to hike U.S. interest rates
(New throughout, updates prices and market activity after Fed
rate decision and dollar weakness)
By Barani Krishnan
NEW YORK, April 27 (Reuters) - Oil prices jumped about 3
percent on Wednesday, hitting new highs for 2016 as the dollar
weakened after the Federal Reserve announced it would leave U.S.
interest rates unchanged.
Oil had risen early, the day after an industry group said
U.S. crude inventories had dropped in the latest week. But
prices retreated after the U.S. Energy Information
Administration reported in the morning that crude stocks climbed
2 million barrels last week to an all-time peak of 540.6 million
barrels. API/S EIA/S
A Reuters poll of analysts had forecast a build of
2.4-million barrels.
In early afternoon, the Fed announced it was leaving
interest rates unchanged, and issued a statement implying it was
in no hurry to raise rates. Futures of Brent and U.S. crude's
West Texas Intermediate (WTI) surged minutes before settlement,
hitting new peaks for the year as the dollar sank to session
lows.
"Bullish momentum from a technical perspective, in cahoots
with dovish Fed rhetoric, has this market on fire again despite
the crude inventories we're seeing," said Matt Smith, director
of commodities research at New York-headquartered Clipperdata.
Front-month Brent LCOc1 finished up $1.44, at $47.18,
having hit a 2016 high of $47.45 earlier.
WTI's front-month contract CLc1 settled up $1.29, percent,
at $45.33 a barrel, after hitting a 2016 high at $45.62.
Declines in the dollar .DXY make oil and other commodities
denominated in the greenback more affordable to holders of other
currencies. FRX/
Futures of heating oil HOc1 , also known as ultralow sulfur
diesel, jumped 3 percent as stockpiles of distillates
USOILD=ECI , which include ULSD, fell much more sharply than
expected, the EIA data showed.
Gasoline futures RBc1 rose to August highs despite an
inventory build that also far exceeded expectations.
USOILG=ECI
Some traders said crude's rally was overdone, and warned
that higher prices could encourage more production which would
aggravate a global supply glut.
Brent has gained more than $20 a barrel, or nearly 75
percent, since hitting 12-year lows in late January. For April,
it is up 19 percent, heading for its largest monthly gain in a
year.
"With crude inventories building and the Saudis still
pumping at record levels, we feel the recent run-up has been
mainly fueled by the weakness on the dollar," said Tariq Zahir,
trader and portfolio manager at Tyche Capital Advisors in New
York.
The prospect of a production freeze among the world's
largest oil exporters evaporated almost two weeks ago after a
meeting between OPEC and Russia ended in stalemate.