WTI oil tests new highs amid no signs of progress in the Middle East. U.S. attempts to put maximum economic pressure on Iran to force the country back to negotiations.
Yesterday, Iran attacked UAE by firing several missiles, which fell into the sea. UAE responded by stopping all trade and financial transactions with Iran. This move would deal a major blow to Iranian economy, which is dependent on transactions with UAE.
That said, the market does not believe that UAE’s decision would force Iran back to negotiations in the near term. Traders bet on additional escalation. Obviously, Iran cannot afford to wait until the country’s economy collapses under sanctions and naval blockade. Thus, Iran will likely try to escalate to raise costs for the global economy.
Today, traders also had a chance to take a look at the EIA Weekly Petroleum Status Report. The report indicated that crude inventories increased by +4.4 million barrels from the previous week, compared to analyst forecast of -0.6 million barrels.
Gasoline inventories grew by +0.7 million barrels, compared to analyst consensus of -1.2 million barrels. Distillate fuel inventories declined by -1.5 million barrels from the previous week.