Oil swung in a range of about $1 after the Fed delivered a mixed message: the central bank said it would continue buying bonds at a pace of $85 billion a month, which helps keep interest rates at low levels.
But chairman Ben Bernanke also offered a more optimistic outlook for the U.S. economy and said the Fed could start scaling back on the bond purchases later this year if conditions continue to improve.
Timothy Duy, a University of Oregon economist who tracks the Fed, called the statement "an open door for scaling back asset purchases as early as September."
Benchmark West Texas Intermediate crude for July delivery dropped 20 cents to finish at US$98.24 a barrel on the New York Mercantile Exchange.
Meanwhile, the U.S. inventory of crude oil has grown by 300,000 barrels, or 0.1 per cent. At 394.1 million barrels, supplies are 1.8 per cent above year-ago levels, the Energy Information Administration said in its weekly report. Analysts had expected supplies to drop by one million barrels.
Brent crude, a benchmark for many international oil varieties, rose 10 cents to end at US$106.12 a barrel on the ICE Futures exchange in London.
In other energy futures trading on the Nymex, wholesale gasoline rose one cent to finish at US$2.89 a U.S. gallon (3.79 litres), heating oil rose one cent to end at US$2.97 a gallon and natural gas gained six cents to finish at $3.96 per 1,000 cubic feet.
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