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Oil Prices Reach $112 in New York, $125 in London Despite Poor Economic Data

Oil climbs despite poor economic data

NEW YORK, April 28, 2011 (Xinhua) --

U.S. crude oil settled higher on Thursday, although data showed U.S. economic growth slowed in the first quarter and jobless claims rose last week.

The oil price surged in early trading session on Thursday as Federal Reserve Chairman Ben Bernanke's comments on Wednesday reassured investors that the ultra-loose monetary policy would still last for a period of time.

However, the oil price dipped after disappointing data drew investors' attention. The U.S. economy grew at an annual rate of 1. 8 percent in the first quarter of 2011, much lower than the 3.1- percent pace in the prior quarter, according to the Commerce Department.

The poor level of U.S. economic expansion dampened investors' expectation of energy demands and weighed on the oil price.

Meanwhile, the Labor Department said new applications for unemployment benefits jumped last week by 25,000 to a seasonally adjusted 429,000, the highest level in three months, suggesting that the recovery of the labor market still had a long way to go.

The oil price reversed its losses and edged higher in late trading session, mainly lifted by the weak dollar.

Light, sweet crude for June delivery rose 10 cents to settle at 112.86 dollars a barrel on the New York Mercantile Exchange. In London, Brent crude for June delivery last traded above 125 dollars a barrel.

Editor: Mu Xuequan

U.S. economic growth slows in first quarter

WASHINGTON, April 28, 2011 (Xinhua) --

 U.S. economy expanded much slower in the first quarter this year, mainly reflecting rising oil price and government spending cut, reported the Commerce Department on Thursday.

U.S. real gross domestic product (GDP) -- the output of goods and services produced by labor and property located in the United States -- rose at an annual rate of 1.8 percent in the January to March quarter of 2011, weaker than the pace of 3.1 percent in the fourth quarter of 2010.

"The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, and nonresidential fixed investment that were partly offset by negative contributions from federal government spending and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased," the department said in a report.

The deceleration in real GDP in the first quarter primarily reflected a sharp upturn in imports, a deceleration in PCE, a larger decrease in federal government spending, and decelerations in nonresidential fixed investment and in exports, noted the department.

Motor vehicle output added 1.40 percentage points to the first- quarter change in real GDP after subtracting 0.27 percentage point from the fourth-quarter change. Final sales of computers added 0. 12 percentage point to the first-quarter change in real GDP after adding 0.35 percentage point to the fourth-quarter change.

Consumer spending accounts for roughly 70 percent of overall economic activity.

In the January to March period, U.S. exports to foreign buyers contributed less to the growth. Real exports of goods and services grew at a 4.9-percent pace, lowered than a 8.6-percent growth in the fourth quarter in 2010.

Imports increased 4.4 percent, in contrast to a decrease of 12. 6 percent in the October-December quarter.

Government spending, however, stopped being a source of growth for the economy in the first quarter. Real federal government consumption expenditures and gross investment decreased 7.9 percent in the first quarter. The federal government cut military spending at an annualized rate of 11.7 percent last quarter -- the deepest cut since 2005.

The price index for gross domestic purchases, which measured prices paid by U.S. residents, rose 3.8 percent in the first quarter, compared with an increase of 2.1 percent in the fourth quarter of 2010. Excluding food and energy prices, the price index for gross domestic purchases gained 2.2 percent in the first quarter, after rising 1.1 percent in the fourth quarter.

The personal saving rate stood at 5.7 percent in the first quarter of 2010, rising slightly from 5.4 percent in the fourth quarter.

On Wednesday the Federal Reserve lowered its growth estimate for the whole year to 3.1-3.3 percent, from its January projection of 3.4-3.9 percent.

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