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U.S. GDP revision lifts crude oil prices

U.S. economy expanding, with Yellen forecasting an imminent rate adjustment from near-zero.

By Daniel J. Graeber
U.S. GDP revision lifts crude oil prices
Japan's Prime Minister Shinzo Abe pledges to keep the nation's economy moving forward. U.S. revision of GDP adds momentum to crude oil prices. Photo by Keizo Mori/UPI | License Photo

NEW YORK, Sept. 25 (UPI) -- An expanding U.S. gross domestic product and pledges of forward momentum from Japan gave crude oil prices a lift in early Friday trading.

West Texas Intermediate, the U.S. benchmark for crude oil prices, gained 1 percent to start the trading day Friday in New York at $45.40 per barrel. Brent crude oil gained four tenths of a percent to $48.38 per barrel.

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WTI is relatively unchanged from the start of September, though Brent crude oil is down about 2.3 percent from Sept. 1.

Concerns about the pace of economic growth in Asia have put downward pressure on crude oil prices during the early stages of the second half of 2014. Japan, the world's third-largest economy, in August said its economy declined at an annualized rate of 1.6 percent from April to June. In early 2015, Japan reported real gross domestic product grew by 2.4 percent from January through March, an improvement over the revised 1.1 percent reported from October through December.

Japanese Prime Minister Shinzo Abe said Friday he'd work to expand the economy by about 20 percent to around $5 trillion. Building a stronger Japanese economy, the prime minister said, would be his administration's top priority moving forward.

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In the United States, the Commerce Department raised its estimate of second quarter GDP growth up 0.2 percent to 3.9 percent.

A late Thursday speech from Federal Reserve Chair Janet Yellen provided momentum to early market movements. Rates are near zero, but with the U.S. economy showing incremental gains, Yellen said "it will likely be appropriate to raise the target range for the federal funds rate sometime later this year."

Slow global economic momentum and a surplus of oil have kept crude oil prices at about 50 percent below their 2014 peaks.

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