Sept. 28 (UPI) — Strong showing for the pace of U.S. economic growth in the second quarter gave further strength Thursday to the sustained rally in crude oil prices.
The U.S. Commerce Department reported real gross domestic product increased at an annual rate of 3.1 percent in the second quarter, the strongest level in years. In a nod to efforts by President Donald Trump to favor the domestic side, the department attributed the GDP growth to a deceleration in imports and an upturn in federal government spending.
In a speech in Indiana on efforts to overhaul the U.S. tax policy, the president said Wednesday the economy hit the 3 percent growth mark sooner than anticipated.
“America is back on the right track,” he said.
The price for Brent crude oil was up 0.67 percent as of 9:00 a.m. EDT, shortly after the Commerce Department release, to $58.29 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.75 percent to $52.53 per barrel.
U.S. crude oil exports are at record levels and WTI is gaining ground on Brent as more refineries come back online after Hurricane Harvey. All of the refineries knocked out by Harvey are back in service, though several are still operating at reduced rates.
Market analyst Ole Hanson of Saxo Bank told UPI that at least some of the recent support for crude oil prices came from the potential for disruptions after the referendum for independence in the Kurdish north of Iraq. Turkey said it could shut the tap on the estimated half million barrels of oil per day that flows north from the region to a port on the Mediterranean Sea.
“The risk of a supply disruption from the Kurdish region is, however, viewed as slim with Turkey probably sticking to saber-rattling for now,” he said. “On the basis of increased U.S. export and production, combined with Libya announcing intentions to increase production by another 30 percent before year end, we remain of the belief that we are currently looking for a peak instead of an extension to upside.”
Trump in his comments from Indiana acknowledged, meanwhile, that U.S. economic growth would likely see lingering impacts from the series of strong hurricanes that hit the mainland and its island territories in recent weeks.
In its report Thursday, the Commerce Department said “the general picture of economic growth remains the same.”
Elsewhere, the U.S. Labor Department reported first-time claims for unemployment for the week ending Sept. 23 jumped 12,000 from the previous week. The four-week moving average, a less-volatile metric, increased 9,000 from the previous average.
“Hurricanes Harvey and Irma impacted this week’s claims,” the department’s report read.