BENGALURU: Oil prices gained more than $2 a barrel on Thursday and were set to break a three-day declining streak as risk appetite returned to financial markets after the US Federal Reserve kept benchmark interest rates on hold.

Brent crude futures rose $2.29, or 2.7%, to $86.92 a barrel by 1:39 p.m. EDT [1739 GMT], while US West Texas Intermediate crude futures gained $2.23, or 2.8%, to $82.67 a barrel.

US policymakers struggled at a two-day policy meeting this week to determine whether financial conditions may be tight enough already to control inflation, or whether an economy that continues to outperform expectations may need still more restraint.

Ultimately, the Fed kept its benchmark interest rate unchanged at 5.25%-5.50% at its latest meeting on Wednesday.

Oil investors have been closely following the Federal Reserve’s policy decisions, concerned that aggressive interest rate hikes could slow down the economy and dent energy demand.

“If the Fed calls off the dogs, the bottom for oil should be very close to being in,” said Phil Flynn, analyst at Price Futures Group. The Bank of England held interest rates at 15-year highs of 5.25% at its latest meeting on Thursday, the second straight month of steady rates after 14 back-to-back hikes.

It also stressed that it is not expecting to make rate cuts any time soon. “Still, it looks clear at this point that the BoE is, like many of its peers, done with the tightening cycle and it’s now a case of how long it remains at the peak,” said Craig Erlam, analyst at OANDA.