WTI rebounds to $77.50 amid US dollar weakness, geopolitical risks
Source Fxstreet
- WTI recovers to $77.50 on the weaker of the US Dollar.
- The International Energy Agency (IEA) said the crude market could be in surplus throughout 2024.
- The escalating Middle East geopolitical tension might lift WTI prices as it disrupts crude supplies.
- Oil traders will monitor the US January Producer Price Index (PPI), due on Friday.
Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around $77.50 on Friday. WTI prices edge higher after the weaker-than-expected US Retail Sales data raise hope that the Federal Reserve (Fed) will soon start cutting interest rates in coming months.
On Thursday, the US Retail Sales for January fell 0.8% MoM from a 0.4% rise in the previous reading, below the market consensus 0.1% decline. That being said, lower interest rates have caused oil prices to rise which translates to more demand for oil as activity increases with lower costs.
Meanwhile, the rising geopolitical tension in the Middle East might boost WTI prices as it disrupts crude supplies Israel launched extensive and lethal airstrikes in southern Lebanon on Wednesday, in response to a deadly missile attack on northern Israel. Israeli leaders have warned that they would take considerably stronger military action in Lebanon if the cross-border violence continues.
On the other hand, the International Energy Agency (IEA) expects that the crude oil will be in excess in 2024. The IEA stated that global oil consumption would rise by +1.2 million bpd in 2024, almost half the pace seen last year. This, in turn, might cap the upside of WTI prices.
Oil traders will keep an eye on the US Producer Price Index (PPI) for January on Friday. Later in the day, the Fed's Barr and Daly are set to speak. These events could significantly impact the USD-denominated WTI price. Oil traders will take cues from the data and find trading opportunities around WTI prices.
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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The downturn occurred despite the reopening of the U.S. government on Thursday, which many had hoped would provide essential support for crypto markets. This year initially appeared promising for cryptocurrencies, particularly after the inauguration of President Donald Trump, who has established the most pro-crypto administration thus far. However, ongoing political tensions—including Trump's tariff strategies and the recent government shutdown, lasting a historic 43 days—have contributed to several rapid price pullbacks for Bitcoin throughout the year.
Market dynamics are also being influenced by Bitcoin whales—investors holding large amounts of Bitcoin—who have been offloading portions of their assets, consequently stalling price rallies even as positive regulatory developments emerge. Despite these sell-offs, analysts from Glassnode argue that this behavior aligns with typical patterns seen among long-term investors during the concluding stages of bull markets, suggesting it is not indicative of a mass exodus.
Notably, Bitcoin is not alone in its struggles, as Ethereum and Solana have also recorded declines of 7.95% and 28.3%, respectively, since the start of the year, while numerous altcoins have faced even steeper losses.
Looking ahead, questions linger regarding the viability of the four-year cycle thesis, particularly given the increasing institutional support and regulatory frameworks now in place in the crypto landscape. Matt Hougan, chief investment officer at Bitwise, remains optimistic, suggesting a potential Bitcoin resurgence in 2026 driven by the “debasement trade” thesis and a broader trend toward increased adoption of stablecoins, tokenization, and decentralized finance. Hougan emphasized the soundness of the underlying fundamentals, pointing to a positive outlook for the sector in the longer term.
Bitcoin experienced a sharp decline this weekend, briefly erasing its 2025 gains and dipping below its year-opening value of $93,507. The cryptocurrency fell to a low of $93,029 on Sunday, representing a 25% drop from its all-time high in October. Although it has rebounded slightly to around $94,209, the pressures on the market remain significant.
The downturn occurred despite the reopening of the U.S. government on Thursday, which many had hoped would provide essential support for crypto markets. This year initially appeared promising for cryptocurrencies, particularly after the inauguration of President Donald Trump, who has established the most pro-crypto administration thus far. However, ongoing political tensions—including Trump's tariff strategies and the recent government shutdown, lasting a historic 43 days—have contributed to several rapid price pullbacks for Bitcoin throughout the year.
Market dynamics are also being influenced by Bitcoin whales—investors holding large amounts of Bitcoin—who have been offloading portions of their assets, consequently stalling price rallies even as positive regulatory developments emerge. Despite these sell-offs, analysts from Glassnode argue that this behavior aligns with typical patterns seen among long-term investors during the concluding stages of bull markets, suggesting it is not indicative of a mass exodus.
Notably, Bitcoin is not alone in its struggles, as Ethereum and Solana have also recorded declines of 7.95% and 28.3%, respectively, since the start of the year, while numerous altcoins have faced even steeper losses.
Looking ahead, questions linger regarding the viability of the four-year cycle thesis, particularly given the increasing institutional support and regulatory frameworks now in place in the crypto landscape. Matt Hougan, chief investment officer at Bitwise, remains optimistic, suggesting a potential Bitcoin resurgence in 2026 driven by the “debasement trade” thesis and a broader trend toward increased adoption of stablecoins, tokenization, and decentralized finance. Hougan emphasized the soundness of the underlying fundamentals, pointing to a positive outlook for the sector in the longer term.
