2017.05.2515:50:00UTC+00Treasuries Close Modestly Higher Amid Steep Drop In Oil Prices

Treasuries moved modestly higher over the course of the trading session on Thursday, extending the upward move seen late in the previous session.

Bond prices turned in a relatively lackluster performance but managed to end the day in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.1 basis points to 2.255 percent.

The modestly higher close by treasuries may partly have been due a steep drop by the price of crude oil, with crude for July delivery plunging $2.46 to $48.90 a barrel.

While OPEC agreed to extend a cut in production until March of 2018, investors had been hoping the cartel would announce a further reduction in output.

Bond traders also continued to react positively to the minutes of the Federal Reserve's latest monetary policy meeting, which included an outline of a plan to trim its $4.5 trillion balance sheet.

Nearly all policymakers expressed a favorable view of the approach, which was seen as consistent with the intention to reduce the Fed's securities holdings in a gradual and predictable manner.

Under the proposed approach, the Fed would announce a set of gradually increasing caps on the dollar amounts of Treasury and agency securities that would be allowed to run off each month.

Only the amounts of securities repayments that exceeded the caps would be reinvested each month, the minutes said.

Treasuries saw continued strength following the release of the results of the Treasury Department's auction of $28 billion worth of seven-year notes, which attracted average demand.

The seven-year note auction drew a high yield of 2.060 percent and a bid-to-cover ratio of 2.54, while the ten previous seven-year note auctions had an average bid-to-cover ratio of 2.53.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

In U.S. economic news, a report released by the Labor Department showed a slight uptick in first-time claims for U.S. unemployment benefits in the week ended May 20th.

The report said initial jobless claims inched up to 234,000, an increase of 1,000 from the previous week's revised level of 233,000. Economists had expected jobless claims to climb to 238,000.

Economic data may attract attention on Friday, with traders likely to keep an eye on reports on fist quarter GDP, durable goods orders, and consumer sentiment.