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WTI above $83.50 on disappointing US GDP, Gaza fears

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The benchmark US crude oil Western Texas Intermediate (WTI) is trading higher around $83.60 on Friday as the market weighed the weaker-than-expected US economic growth data against a potential geopolitical risk from a looming Israeli invasion of the southern Gaza city of Rafah.

WTI prices face some sell-off following the GDP report from the Commerce Department on Thursday.

The US economy expanded at its slowest pace in nearly two years in the first quarter, as inflation rose at a faster pace.

The advanced US GDP grew by 1.6% on an annualised basis in Q1 in 2024, compared to a 3.4% growth in Q4 2023. This reading came in below the market estimation of 2.5%.

Additionally, inflation in the United States remains elevated and it might trigger speculation that the Federal Reserve will not cut interest rates before September.

However, WTI prices recover and hold positive ground after Treasury Secretary Janet Yellen said that US economic growth was likely stronger than suggested by weaker-than-expected quarterly data.

Apart from this, the concern over oil supply disruption amid the escalating geopolitical tensions boosts the black gold.

Israel launched airstrikes on Rafah as the country made preparations to invade the city, per Reuters.

The worries about the largest drawdown in US commercial crude stockpiles since mid-January also lifted the WTI prices

The Energy Information Administration (EIA) reported that crude inventories for the week ending April 19 fell by 6.368 million barrels from the previous reading of 2.735 million barrels built.

(Source: OANDA)