NEW YORK (CNNMoney.com) -- Oil prices soared on Tuesday amid a weaker dollar and a rebound in the stock market, as the Federal Reserve left a key interest rate unchanged.
What prices were doing: Crude skyrocketed $1.90 to settle at $81.70 a barrel on Tuesday.
What's moving the market: Prices rebounded from Monday's sell-off, as the dollar weakened and bolstered demand for crude.
The dollar was down against the euro, propping up oil, which is denominated in U.S. dollars. Oil shot up to an intraday high of $82.04 a barrel.
What analysts are saying: "We're still in a market with a high inverse correlation to the dollar," said Stephen Shork, a commodities analyst for The Shork Group.
Oil prices had a strong run-up in the last two weeks before a sell-off on Monday. Prices for crude are up over 70% from last year.
Many analysts expect the rally to continue over the medium term, but the current wild swings are "Wall Street playing games," said Shork. "Every time you think it's going down, a lot of money comes in to try to support the market."
The Fed said it would hold its target for the discount rate unchanged on Tuesday, as it continues to unwind the emergency policies it put in place at the start of the financial crisis.
Though the economy is showing signs of recovery, the Fed said a lack of inflationary pressure and still uncomfortably high unemployment are among the reasons for low rates "for an extended period."
The discount rate is the interest rate the central bank charges financial institutions to borrow. On Feb. 18, the Fed raised the discount rate by 25 basis points to 0.75%.
The Fed's comments were a yawn for the crude oil market, which has been trading up all day. "We're still within normal trading range," said Mark Waggoner, president of Excel Futures. "Oil's still having trouble breaking $82 to $83 a barrel."
Looking ahead: Traders are keeping an eye on OPEC's semi-annual meeting on Wednesday, but no surprises are expected from that meeting.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.80%||3.88%|
|15 yr fixed||3.20%||3.23%|
|30 yr refi||3.82%||3.93%|
|15 yr refi||3.20%||3.23%|
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