WTI drifts lower below $78.00 on halt in Houthis' Red Sea attacks
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WTI price loses traction to near $77.85 in Friday’s early Asian session.
Maritime security officials expect a halt to Houthi shipping attacks.
The expectation of rising oil demand during the Lunar New Year might support the WTI price.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $77.85 on Friday. The WTI price edges lower on an expected halt to Houthi shipping attacks in the Red Sea after a ceasefire deal in the war in Gaza between Israel and the militant group Hamas.
Maritime security officials said on Thursday that they were expecting the Houthi militia to announce a halt in its attacks on ships in the Red Sea. "The Houthi development and the ceasefire in Gaza help the region stay calmer, taking some of the security premium out of oil prices," said John Kilduff, partner at Again Capital in New York.
The US Commerce Department reported on Thursday that US Retail Sales increased in December, pointing to strong demand in the economy. Additionally, the Federal Reserve's (Fed) cautious approach to cutting interest rates this year might support the Greenback in the near term and weigh on the USD-denominated commodity price. The Federal Open Market Committee (FOMC) members will meet again on January 28-29, with pricing in almost no chance of a move.
On the other hand, analysts estimate oil consumption to rise by 1.4 million bpd year on year in the next weeks, driven by increased travel activity in India, where a large festival is taking place, as well as travel for Lunar New Year festivities in China at the end of January.
Oil traders will closely monitor the release of China’s Gross Domestic Product (GDP) for the fourth quarter (Q4) of 2024, along with the Retail Sales and Industrial Production. Any signs of the recovery in the Chinese economy could underpin the WTI price as China is the world's second-largest consumer of oil.
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