Crude oil futures erase gains on downbeat U.S. GDP data

Forex Pros – Crude oil futures erased gains on Thursday, retreating from a two-week high after worse-than-expected U.S. GDP data and an unexpected rise in weekly jobless claims fuelled concerns over the pace of the U.S. economic recovery.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in July traded at USD100.88 a barrel during U.S. morning trade, shedding 0.17%.    

It earlier rose as much as 0.8% to USD101.90 a barrel, the highest price since May 11.

Crude futures turned lower after the U.S. Commerce Department said its second estimate of gross domestic product growth was unrevised at annual rate of 1.8% in the three-months to March, below economists' expectations for a 2.1% increase.

In a separate report, the Labor Department said the number of individuals filing for initial jobless benefits in the week ending May 21 unexpectedly rose by 10K to a seasonally adjusted 424K, from an upwardly revised 414K in the preceding week. Analysts had expected initial jobless claims to fall to 400K.

The disappointing data triggered fears over a slowdown in demand from the world’s largest crude consumer.

However, losses were limited as the U.S. dollar was broadly weaker following the data. The dollar index was down 0.69% to hit 75.48, after earlier dropping to 75.44, the lowest since May 19.

Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.

Meanwhile, global financial service provider Societe Generale said that oil may rise to USD106 a barrel in the coming weeks as prices mirror an early-May pullback in 2010 that launched a rally during the rest of that year.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for July delivery eased up 0.05% to trade at USD114.81 a barrel, up USD13.93 on its U.S. counterpart.

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