WASHINGTON (DTN) -- In afternoon trade Thursday, oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange posted solid gains, with the U.S. crude benchmark settling at $65.01 barrel (bbl) after government data showed the U.S. economy expanded at an annualized rate of 6.4% in the first three months of the year, and weekly unemployment claims fell to the lowest reading since the beginning of the pandemic, underscoring the continued recovery of the labor market.
Data released Thursday by the U.S. Bureau of Economic Analysis provided further evidence that the economy has picked up speed in the early months of 2021, but also highlighted some of the emerging challenges facing growth prospects. The 6.4% annualized growth rate for U.S. gross domestic product during the first quarter compared with median expectations for a 6.5% increase and was bearish against earlier estimates of a 7.9% growth rate from the Federal Reserve Bank of Atlanta's nowcast.
Personal consumption, which accounts for nearly 70% of total U.S. economic output, surged at an annualized 10.7% rate, the second-fastest pace since the 1960s. Business investment, the second largest component of the GDP, also had a strong showing in the January-March period, up 9.9%, and 2.7% higher year-on-year.
Economists had long predicted the post-pandemic recovery would be led by the boom in personal consumption fueled by two rounds of stimulus measures, pent-up demand and broader business re-openings after nearly a year of contending with quarantine restrictions.
A host of high-frequency data, including restaurant and air travel bookings, already showed a rapidly improving economy that had helped to drive stocks and commodity markets higher in recent weeks.
However, pent-up demand has been met with unpreceded disruptions in global supply chains, leading to material shortages and firms unable to replenish dwindling inventories. Two components of GDP growth -- change in private inventories and net exports -- declined from the final months of 2020, weighing on first-quarter growth.
Net exports of goods and services subtracted 0.87% from GDP, while the change in private inventories subtracted 2.64% from the expansion.
Separately, initial filings for unemployment claims last week fell to the lowest reading since the beginning of the pandemic at 553,000, down 13,000 from the previous week. The latest reading marked the third straight week jobless claims were below 600,000, their lowest levels since early 2020. The four-week moving average, which evens out volatility in the weekly figures, was 611,750, also a pandemic low.
New claims this month are well below the millions of claims filed weekly a year ago, but still more than double the roughly 200,000 weekly applications submitted in the months before the pandemic began. Citing the ongoing weakness in labor market, the Federal Open Market Committee left its benchmark interest rate unchanged between 0.25% and 0% in its April decision and kept its $120 billion a month bond purchasing program intact.
On the session, NYMEX June West Texas Intermediate futures advanced $1.15 to settle just above $65 bbl, and ICE June Brent futures gained $1.29 to settle at $68.56 bbl. Next-month delivery July ICE Brent futures expanded its discount to $0.51 against the expiring contact. NYMEX May ULSD futures rallied 2.28 cents to $1.9614 gallon, with next-month delivery contact settling near parity. NYMEX May RBOB futures extended 2.77 cents higher to $2.0999 gallon with the June contract settling with a 0.39 cents premium.
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