Western Texas Intermediate (WTI), the benchmark for US crude oil, experienced a slight uptick on Friday, hovering around $83.60 per barrel. This increase came as the market deliberated the impact of softer-than-anticipated US economic growth figures against the backdrop of potential geopolitical risks stemming from heightened tensions in the Middle East.
The recent GDP report from the Commerce Department, released on Thursday, served as a catalyst for some selling pressure on WTI prices. The data revealed that the US economy expanded at its slowest pace in nearly two years during the first quarter of 2024, coinciding with a notable uptick in inflation. The advanced GDP figures indicated a modest growth rate of 1.6% on an annualized basis for Q1 2024, falling short of market expectations which had pegged it at 2.5%. This subdued economic performance, coupled with persistent inflationary pressures, raised speculations regarding the Federal Reserve’s timeline for potential interest rate adjustments, with some analysts suggesting a delay until at least September.
However, WTI prices managed to regain positive momentum following remarks from Treasury Secretary Janet Yellen, who expressed optimism regarding the underlying strength of the US economy despite the tepid quarterly data.
In addition to domestic economic factors, concerns over potential disruptions to oil supply surged amidst escalating geopolitical tensions, particularly surrounding the Israeli military’s airstrikes on Rafah in anticipation of a potential invasion. These developments heightened market anxieties and lent support to crude oil prices.
Furthermore, bullish sentiment was reinforced by reports of the largest drawdown in US commercial crude stockpiles since mid-January. According to the Energy Information Administration (EIA), crude inventories for the week ending April 19 witnessed a significant decline of 6.368 million barrels, marking a stark contrast to the previous week’s build of 2.735 million barrels.
Amidst this complex interplay of factors, WTI crude oil prices remained resilient, reflecting the intricate balance between economic fundamentals, geopolitical dynamics, and supply-side considerations. Market participants continue to monitor developments closely for insights into the future trajectory of oil prices in the face of evolving global dynamics.
