Investing.com - Crude oil gave up some of its overnight gains on Thursday, as the U.S. dollar firmed after Data showed that U.S. economic growth accelerated in the second quarter, supporting the case for higher interest rates later this year.
The Commerce Department said earlier that the economy grew 2.3% in the three months ended June 30, missing expectations for growth of 2.6%. The economy expanded 0.6% in the preceding quarter, compared to a previously reported contraction of 0.2%.
The data showed personal consumption rose 2.9% in the second quarter, above expectations for a 2.7% gain, and compared to a 1.8% increase in the preceding quarter. Consumer spending typically accounts for nearly 70% of U.S. economic growth.
At the same time, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits rose by 12,000 last week to 267,000 from the previous week’s total of 255,000. Analysts had expected initial jobless claims to rise by 15,000 to 270,000 last week.
First-time jobless claims have held below the 300,000-level for 21 consecutive weeks, which is usually associated with a firming labor market.
The data came after the Federal Reserve said in its rate statement on Wednesday that the economy and the labor market had continued to strengthen, reinforcing expectations for an initial rate hike at its September meeting.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.5% to 97.71 early on Thursday, improving from 97.08 by close of trade on Wednesday.
Dollar-denominated oil futures contracts tend to fall when the dollar rises, as this makes oil more expensive for buyers in other currencies.
On the ICE Futures Exchange in London, Brent oil for September delivery tacked on 16 cents, or 0.31%, to trade at $53.55 a barrel during U.S. morning hours after rising to an intraday peak of $54.37.
A day earlier, London-traded Brent futures fell to $52.51 before erasing losses to end at $53.38, up 8 cents, or 0.15%.
The Wall Street Journal reported that Saudi Arabia could slash crude output by 200,000 to 300,000 barrels a day, to roughly 10.3 million bpd as early as September. In June, the kingdom produced more than 10.5 million barrels a day, amounting to its highest level on record.
London-traded Brent futures are down nearly 16% in July amid concerns a resumption of Iranian oil exports will add to a global glut.
Iran and six world powers reached a long-awaited nuclear deal earlier in the month that would end sanctions on Tehran in exchange for curbs on the country's disputed nuclear program. Iran reportedly hoards 30 million barrels of oil in its reserves ready for export.
Reports of record high oil exports from Iraq and robust production from Saudi Arabia also contributed to losses.
Elsewhere, on the New York Mercantile Exchange, crude oil for September delivery inched down 15 cents, or 0.31% to trade at $48.64 a barrel.
On Wednesday, Nymex oil futures jumped to $49.52, the strongest level since July 23, before closing at $48.97, up 81 cents, or 1.69%, following the release of encouraging weekly data on U.S. oil supplies.
Crude oil inventories fell by 4.2 million barrels last week to 459.7 million, according to the U.S. Energy Information Administration. Market analysts' expected a crude-stock fall of 0.2 million.
New York-traded oil futures are on track to post an 18% drop in July, amid ongoing worries over high domestic U.S. oil production.
According to industry research group Baker Hughes (NYSE:BHI), the number of rigs drilling for oil in the U.S. increased by 21 last week to 659, the most since May.
Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $4.91 a barrel, compared to $4.41 by close of trade on Wednesday.