NEW YORK (Reuters) - Oil rose 2.4 percent on Tuesday as the dollar weakened after the U.S. Federal Reserve pledged to keep interest rates near zero for an extended period, and as OPEC ministers planned to keep oil output cuts in place at a meeting Wednesday.
The dollar weakened 0.7 percent against a basket of currencies .DXY after the Fed signaled it would hold benchmark interest rates near zero and renewed a pledge to keep them there for an "extended period." The Fed also said the U.S. labor market was "stabilizing" following a recession.
The dollar also fell after European finance ministers agreed to technical terms on Monday to provide debt-stricken Greece with aid. A flagging dollar makes oil cheaper for holders of other currencies.
Saudi oil minister Ali al-Naimi said Tuesday OPEC may not need to adjust targets this year, after it scaled back output by 4.2 million barrels a day in late 2008 to prop up falling oil prices. OPEC is likely to hold production targets steady when its ministers meet in Vienna on Wednesday.
“We have been sailing very well and will continue to sail very well,” Naimi told reporters in Vienna. He had told reporters on Monday that OPEC saw no need to adjust supplies.
U.S. crude prices for April rose $1.90 to settle at $81.70 a barrel. April ICE Brent futures , which expired Tuesday, rose $1.13 to settle at $79.02 a barrel.
Loose Fed monetary policy can spur investment flows into oil and other commodities as investors seek richer returns.
A report late Tuesday from the private industry American Petroleum Institute showed that crude stocks rose for the seventh straight time last week, but by less than many analysts expected.
The API report showed U.S. crude stocks rose 403,000 barrels in the week through March 12, versus analyst expectations of a 1.1 million barrel rise. A weekly inventory report from the U.S. government Energy Information Administration is due out Wednesday at 10:30 a.m. EDT.
Oil prices had slid nearly 2 percent on Monday, falling below $80 a barrel for the first time since March 4 on fears that a 16-month high in consumer inflation in China might lead to further Chinese monetary tightening as early as this week.
China has already tightened bank reserve requirements twice this year, with each move hitting commodity markets worried about demand growth.
The threat of future attacks on the oil industry in Nigeria may be supporting oil after militants detonated two car bombs outside a government building on Monday.
Reporting by Joshua Schneyer, Robert Gibbons and Matthew Robinson in New York; Emma Farge in London and Michael Urquhart in Singapore; Editing by David Gregorio
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