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Crude oil rally knows no limit

U.S. wage growth offsets negative inflation in Europe, lifting oil higher in Friday trading.

By Daniel J. Graeber
Crude oil continues its steady march toward $50 per barrel after the U.S. Commerce Department shows wages for American workers increased. File photo by Monika Graff/UPI
Crude oil continues its steady march toward $50 per barrel after the U.S. Commerce Department shows wages for American workers increased. File photo by Monika Graff/UPI | License Photo

NEW YORK, April 29 (UPI) -- Strong recovery for U.S. consumer wages balanced against a slowdown in the European economy, but it was enough for a soft rally Friday for crude oil prices.

The U.S. Commerce Department reported personal income and disposable personal income both increased for Americans in March by about 0.4 percent. That's a rebound from the 0.1 percent increase reported for both indices in February.

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The economy slowed during the first quarter, increasing at an annual rate of 0.5 percent in the United States, down from the 1.4 percent growth rate in the fourth quarter. The Commerce Department said Friday, however, that wages and salaries in March increased $29.2 billion, against a February contraction of $4.6 billion.

Crude oil prices, which have increased steadily during the month of April, again saw gains at the start of trading Friday in New York. The price for Brent crude oil moved up 0.3 percent to $48.31 per barrel. West Texas Intermediate, the U.S. benchmark price for crude oil, gained 0.8 percent to $46.44 per barrel.

Friday's start could face pressure once Baker Hughes releases its weekly tally for rig counts. Any decline would mark the sixth consecutive decline in exploration and production activity in a North American energy sector reporting dwindling output.

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In Europe, meanwhile, a flash estimate of first quarter gross domestic production showed 0.6 percent growth for the member states that use the euro currency, down from the 1.6 percent growth recorded in the first quarter of 2015.

The slowdown was more apparent in reported figures on inflation, which turned negative by 0.2 percent in April, against a flat rate in March.

Russia's Central Bank, meanwhile, said it was holding the line by keeping its key rate unchanged at 11 percent. In a rationale statement, the bank pointed to inflationary pressures and potential risks that oil prices could turn lower in the foreseeable future.

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