Crude oil riding the Yellen train

NEW YORK, Sept. 22 (UPI) -- Crude oil prices moved higher in early Thursday trading after strong labor data from the United States lent support to a possible rate hike later this year.

U.S. Federal Reserve Chair Janet Yellen said economic growth in the United States was subdued during the first half of the year, but gains in household spending stimulated growth since then.

"Business investment, however, remains soft, both in the energy sector and more broadly," she said in opening remarks Wednesday afternoon. "The energy industry has been hard hit by the drop in oil prices since mid-2014, and investment in that sector continued to contract through the first half of the year. However, drilling is now showing signs of stabilizing."

Nevertheless, with steady gains in exploration and production activity offering an indication that the market may have hit bottom, Yellen said that, while rates would be left alone, the economy is expected to expand. Economic data over the past few weeks show pressures on the U.S. economy remain, though recent trends in employment add support to the possibility of a rate increase later this year.

The U.S. Labor Department reported first-time claims for unemployment declined by 8,000 last week to a seasonally adjusted 252,000, the lowest level since July. The less-volatile four-week average declined 2,250 to 258,500.

Crude oil prices extended a rally sparked by Yellen's comments into early Thursday trading. The price for Brent crude oil moved higher by 1.9 percent to start the day at $47.73 per barrel. The U.S. benchmark price, West Texas Intermediate, gained 2.4 percent to open the day in New York at $46.41 per barrel.

The price movement is in contrast to trends in production. Russia's deputy energy minister sparked a news media frenzy early Thursday when he said a cut in output was technically possible, though Energy Minister Alexander Novak corrected him later to say there were no proposals to curb production.

In a statement on strategy, French energy company Total said its production was on pace for an average increase of 5 percent through 2019, with more than a dozen new start-ups on the schedule. Libya and Nigeria, two members of the Organization of Petroleum Exporting Countries, are both on the cusp of recovery.

Ministers from OPEC and non-member states could review proposals to keep production rates steady at meetings next week in Algeria. In no uncertain terms, Olivier Jakob, the managing director at Swiss oil-market research group Petromatrix, said in an emailed statement that he was calling the bluff of both the U.S. Federal Reserve and OPEC ministers.

"The U.S. Fed is all about talk and no action and the crude oil market can now speculate for the next two days if the same will characterize the upcoming meeting of OPEC members in Algeria," he said.