A revised growth estimate for the fourth quarter in the United States helped extend a rally in crude oil prices early Thursday. File photo by Monika Graff/UPI. |
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March 30 (UPI) -- Crude oil prices were on pace for another day of solid gains Thursday after a report showed fourth quarter gains in the United States were better than expected.
Crude oil prices surged Wednesday more than 2 percent after data from the U.S. Energy Information Administration confirmed gains in crude oil inventories, but also showed a steep decline in petroleum products like gasoline. Security-related production declines in Libya, one of the members of the Organization of Petroleum Exporting Countries operating outside an agreement to stem output, added to pressure from what could be a tightening market.
Adding support to the mid-week rally was a report from the U.S. Commerce Department that fourth quarter growth in real gross domestic product was an annualized 2.1 percent, up from the previous estimate of 1.9 percent.
Crude oil price movements early Thursday suggested another day of strong gains. The price for Brent crude oil was up 0.2 percent minutes before the start of trading in New York to $52.57 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.8 percent to $49.89 per barrel.
Gains in crude oil prices could make or break the rally over the medium term. Too much of a gain could provide incentive to spend more on exploration and production, which could lead to supply-side pressures. Robust production from the United States and a prior OPEC policy to defend a market share with higher output pushed the price of oil to historic lows last year.
Despite short-term signs of a supply crunch, Jenna Delaney, a senior analyst at Platts Analytics, said in an emailed newsletter that one concerning data point in the EIA's numbers was steady gains in U.S. crude oil imports and rising exports.
"In the weeks to come, the market will need to see indications that the United States can balance for other reasons than simply pushing more domestic barrels out into the global market," she said.
The latest energy sector survey from the Federal Reserve Bank in Dallas found most respondents were upbeat about the prospects ahead. WTI peaked in late February at $54.48 per barrel, though those taking part in the bank's survey said they expected the year to end at around $53 per barrel.
For the U.S. economy on the whole, the Commerce Department noted that third quarter GDP increased 3.5 percent.
"With this third estimate for the fourth quarter, the general picture of economic growth remains largely
the same," its report read.
