NEW YORK, Oct. 29 (UPI) — Crude oil prices started Thursday in the black, riding the momentum sparked by sentiment from the U.S. Federal Reserve that economic activity was expanding.
Crude oil prices rallied Wednesday for one of the strongest days in nearly two months. Brent crude oil was searching for direction in early Thursday trading after flirting with the $50 mark overnight. By the start of trading in New York, Brent wasdown about 0.3 percent from the previous session to $48.89 per barrel. West Texas Intermediate, the U.S. benchmark for the price of crude oil, was up about 0.5 percentin early trading to $46.16 per barrel.
Even with Wednesday’s rally, both Brent and WTI are below the price at which they started October.
Crude oil prices are faltering because supplies outweigh demand at a time when global economic growth, and therefore demand, is weak. Even though low energy prices are keeping inflation below a level considered health, the U.S. Federal Reserve said Wednesday there were ongoing signs that economic activity was “expanding at a moderate pace.”
The Federal Reserve decided to hold interest rates steady, saying the effects of the declines in the energy markets are expected to dissipate.
The U.S. Bureau of Economic Analysis, however, reported an economic slowdown. Gross domestic product in the United States increased at an annual rate in the third quarter by 1.5 percent, compared with a 3.9 percent increase in GDP during the second quarter.
The U.S. Labor Department, meanwhile, said job losses continued to mount, with initial claims for unemployment protection increasing 1,000 from the previous week to 260,000 for the week ending Oct. 24.
The increase in WTI may be a reaction to the start of oil swaps between the United States and Mexico. Each country swaps barrels, however, in a one-to-one trade. In further indications of supplies, the U.S. Energy Information Administration reported only a slight increase in crude oil supplies, but a net decline in gasoline stockpiles.
