Middle East Tensions Keep Oil Prices Elevated Amid Inventory Growth
Oil prices have remained steady near recent highs as traders assess risks for additional Middle East turmoil. The Strait of Hormuz continues to be a hotspot, with slow shipping and mixed signals from the US and Iran.
The risk premium in oil prices is supported by sporadic attacks and tensions between Iran, the UAE, and Oman, but the lack of major escalation has limited fresh buying.
Growth in U.S. inventories could also limit additional gains, with crude inventories rising by 4.4 million barrels. This indicates that US supply remains fairly comfortable, and demand may not be strong enough to propel a significant rally.
WTI crude oil is forming constructive price action above the $70 region, with a break above $87 pushing prices towards $93.80 and the $97 area. A break above this descending trend line will likely confirm a bottom and push prices towards the $105 region.