Oil Surges Amid Yemen Strikes, US Inflation Data Surprises, and Bitcoin ETFs Hit $1 Billion in Trading Volume

Oil Prices Rise More Than 2% After US, UK Strikes in Yemen

Oil prices rose more than 2% on Friday as the United States and the United Kingdom carried out airstrikes against Houthi military targets in Yemen in retaliation for the group’s attacks on ships in the Red Sea since late last year.

Brent crude futures rose $1.81, or 3.2%, to $79.27 a barrel, while US West Texas Intermediate crude rose $1.73, or 5.2%, to $82.73 by 0154 GMT.

The US and UK strikes represent one of the most dramatic developments yet in the widening war between Israel and the Palestinian Islamic Resistance Movement (Hamas) in the Middle East since it erupted in October. Witnesses in Yemen confirmed explosions throughout the country.

US President Joe Biden said the precise strikes were a “clear message” that the United States and its partners will not stand idly by “in the face of attacks on individuals” and that they will not allow “hostile actors” to endanger freedom of navigation. He added that Australia, Bahrain, Canada, and the Netherlands supported the operation.

The US-led strikes came after Iran seized a tanker carrying Iraqi oil that was en route to Turkey on Thursday in retaliation for the United States seizing oil that was being carried by the same tanker last year.

US Inflation Data Surprises Everyone, Spurs Fed to Keep Rates High

Both the headline and core Consumer Price Index (CPI) rose on an annual basis in December, beating expectations from economists. The headline CPI rose 7% year-on-year, unexpectedly matching the November reading and also matching expectations.

On a monthly basis, the headline CPI also accelerated, again beating expectations and the previous reading. The core CPI, which excludes food and energy prices, held steady.

This time, the data came in favor of the dollar, not stocks or gold, after inflation accelerated again and jobless claims slowed less than expected, also below the previous reading. This suggests a strong economy and labor market, which gives the Federal Reserve the justification to maintain its tight monetary policy for longer.

Gold and the Dollar Now

Gold futures are now up 4% to $2,043 an ounce, while spot gold is up 3.5% to $2,038 an ounce.

On the other hand, the dollar index is up to 102.75 points, or 1.8%.

Bitcoin Surpasses $49,000 for a Brief Moment, ETFs Break $1 Billion

The price of bitcoin briefly surpassed $49,000 on the first day after the US Securities and Exchange Commission (SEC) approved the launch of exchange-traded funds (ETFs) that track bitcoin futures on Wednesday.

The price of bitcoin is now trading between $45,500 and $46,000 as live trading of bitcoin ETFs begins in the US market. According to available data, the volume of the bitcoin futures ETF exceeded $1 billion in just minutes after the US market opened. The opening price of the iShares Bitcoin Trust (IBIT) was $64.28. The price of the Grayscale Bitcoin Trust (GBTC) also rose, reaching $27.50.

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Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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