The CAC 40 looked like it was going to have a strong day in the market on Wednesday. However, toward the end of the day, two big stories with regard to oil broke, dragging the index downward. Today, we’ll talk about those stories, why they caused the CAC 40 to take a dive, and what binary options traders should be watching for ahead.

Oil News Causes CAC 40 Blues

As mentioned above, the CAC started the day off strong before late-in-the-day news surrounding oil sent the index into the red. Ultimately, there were two different bits of news surrounding oil, and both of them were unfortunate. Here’s what we saw…

Political Conflict Turns Ugly – First and foremost, we saw a bit of a political conflict spike up between two key oil producers, Iran and Saudi Arabia. According to various reports, Iran’s Revolutionary Guard has turned on Saudi Arabia. At the end of the day, Iran has accused Saudi Arabia of being part of two attacks by Islamic State terrorists that led to the death of 12 people in Iran’s parliament.

Of course, these accusations were met by rejection from Saudi Arabia. In fact, Saudi Arabia claims that Iran is the primary sponsor of terrorism around the world. Iran also said brought the United States into the discussion, pointing out that the attacks happened shortly after a meeting between the United States and Saudi Arabia.

Ultimately, this proved to be a pain for oil. After all, both Saudi Arabia and Iran are OPEC members. Not to mention, they just so happen to be two of the largest members of the oil cartel. If the two can’t get along, it will threaten the OPEC deal to reduce the production of oil, which could lead to more supply in an already oversupplied world.

US Crude Inventories Climb – The second bit of bad news that hit the oil industry had to do with inventories in the United States. A report was released today showing that crude oil commercial inventories in the country rose by 3.3 million barrels during the week of May 26th. Analysts had expected for the inventories to fall by 3.5 million barrels. Increasing supply creates further supply and demand concerns for oil. As a result, we saw sharp declines shortly after the report was released.