* Brent/WTI spread trades below $10 for 2nd day
* U.S. GDP expands at 2.5 pct annual rate, slower than
* Global oil inventories tightened in March-April -EIA
(Updates prices, adds quotes, adds selloff speculation)
By Anna Louie Sussman
NEW YORK, April 26 (Reuters) - Brent crude oil edged lower
on Friday, following a two-day, $3 rally, as weak economic data
from the United States sounded a note of caution on growth
prospects in the world's largest oil consumer.
Prices cut losses in the afternoon following a midday
commodities selloff that traders said may have been prompted by
fund liquidations as European markets closed for the weekend.
Other commodities such as metals also sold off, and gold lost
"The markets tend to overreact. The oil market got knocked
off its knees and grabbed some legs," said Dan Flynn, an analyst
and trader at Price Futures Group in Chicago, Illinois.
Even though Brent looks on track for its biggest one-week
gain since November 2012, it is still more than 6 percent below
where it started April after a string of disappointing reports
in recent weeks from the U.S., China and Germany stoked fears of
global economic slowdown.
Traders said low trading volumes indicated a lack of
conviction in this week's rally. Volumes for U.S. crude were 35
percent lower than the 30-day moving average.
On Friday, the Commerce Department reported U.S. gross
domestic product expanded at a 2.5 percent annual rate in the
first quarter. This advance read on how the economy kicked off
2013 was slightly worse than the 3.0 percent rate expected,
prompting worries about a deceleration in the second quarter and
sending U.S. equity markets down.
Brent slipped 17 cents to $103.24 a barrel by 2:05
p.m. (1805 GMT), after touching a low of $102.25, while U.S.
crude was down 46 cents at $93.18 after going to $92.06
U.S. crude prices skidded from over $97 at the beginning of
April to below $86 by mid-month.
"The market rebounded pretty strongly in the past week. We
bounced from $85 close to $94 and it looks as if what you're
seeing today is a little bit of profit-taking," said Gene
McGillian, an analyst with Tradition Energy in Stamford,
Brent's premium to U.S. crude futures <CL-LCO1=R> edged
higher Friday after settling below $10 on Thursday for the first
time since January 2012.
"The market has gone through a period of relatively robust
North Sea production, thus weakening the Brent side of the
spread, while market participants are less concerned with the
overhang of crude oil in the U.S. Midwest as the ability to move
oil out of the region continues to increase," Dominick
Chirichella of Energy Management Institute said.
Oil has also been supported by a tightening of global
inventories over the past two months, according to a report from
the U.S. Energy Information Administration, as well as by
ongoing tensions in the Middle East.
Members of the U.S. Congress are calling for action on Syria
after a report showed the likely use of chemical weapons by the
(Additional reporting by Robert Gibbons in New York, Peg Mackey
in London, Florence Tan in Singapore; Editing by Alden Bentley)