U.S. oil prices rally to 4-week high after GDP report

Investing.com - U.S. oil futures rallied to a four-week high on Thursday, after data showed that the U.S. economy expanded in line with expectations in the fourth quarter, underlining optimism over the strength of the economy.

On the New York Mercantile Exchange, West Texas Intermediate crude for delivery in March rallied to a session high of USD98.58 a barrel, the strongest since January 2, before trimming gains to trade at USD98.47 a barrel during U.S. morning hours, up 1.15%.

WTI oil prices settled 0.05% lower on Wednesday to end at USD97.36 a barrel. Nymex oil futures were likely to find support at USD95.63 a barrel, the low from January 28 and resistance at USD98.96 a barrel, the high from January 2.

The Commerce Department said U.S. gross domestic product grew at a seasonally adjusted annual rate of 3.2% in the fourth quarter, meeting expectations.

The data showed personal consumption grew 3.3% in the three months ended December 31, the biggest increase in three years.

A separate report showed that the number of people who filed for unemployment assistance in the U.S. last week rose to a six-week high of 348,000, an increase of 19,000 from the previous week’s revised total of 329,000.

Also Thursday, the National Association of Realtors said its pending home sales index dropped by a seasonally adjusted 8.7% last month, disappointing expectations for a 0.3% gain.

The Federal Reserve said Wednesday that it will keep a close eye on economic indicators before deciding to wind down its stimulus program even further, after reducing its monthly bond buying program by USD10 billion to a total of USD65 billion a month.

Oil traders shrugged off data confirming a contraction in China’s manufacturing sector. China’s final HSBC Purchasing Managers Index released earlier fell to a six-month low of 49.5 in January from a preliminary reading of 49.6 and down from 50.5 in December.

Meanwhile, market players continued to monitor liquidity conditions in emerging markets, such as Turkey and South Africa.

Emerging markets economies have been hard hit in recent sessions by worries over the impact of cuts in Fed stimulus and concerns over a possible slowdown in China.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for March delivery inched up 0.2% to trade at USD108.07 a barrel, while the spread between the Brent and U.S. crude contracts stood at USD9.60 a barrel.