Oil extends rally by another day

Crude oil prices were supported this week by industry and government data showing the level of oil and gas inventories in the United States, the world's leading economy and top energy consumer, had declined.

The U.S. Energy Information Administration said crude oil production dropped slightly last week, easing some of the supply-side strains. Tightening up demand, the U.S. Commerce Department in its latest estimate said first quarter growth in gross domestic product was 1.4 percent, an increase from the previous estimate of 1.2 percent.

Crude oil prices extended their rally, bouncing off the seven-month lows from last week. The price for Brent crude oil, the global benchmark, was up 1.1 percent at 9:18 EDT to $47.83 per barrel. The U.S. benchmark, West Texas Intermediate, was up 1.14 percent to $45.25 per barrel.

A survey of business activity from the Federal Reserve Bank of Dallas painted a mixed picture on the broader economy, however. Businesses tied to oil and gas exploration were largely optimistic, but overall momentum regarding production was lower.

"This suggests oil and gas production is rising at a slower pace than last quarter," the bank's report read.

Elsewhere, economics and the Dallas Fed said bank profitability in the region is below average.

"Overall, district bank activity has declined over the past two years, primarily due to energy-sector woes," it said.

On the inventory levels, the data may be skewed because of the impact on southern U.S. operations last week from Tropical Storm Cindy. Meanwhile, first quarter growth in U.S. GDP was still lower than the 2.1 percent recorded during the fourth quarter.