Oil Surges To Fresh Highs On Growing Supply Worries

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Even though U.S. President Donald Trump has yet to announce whether he'll pull out of the 2015 Iranian nuclear deal as a May 12 deadline nears, American officials already are positioning for post-accord negotiations. USA drivers who've noticed higher prices at the pump may be tempted to blame Trump's Iran decision, but it's only one factor at play right now.

In currency markets, the dollar broadly held firm on the prospect of solid USA economic growth, helped partly by Trump's tax cuts and spending, pointed to further rises in U.S. interest rates down the road.

But US output has soared by more than a quarter in the past two years to 10.62 million bpd and is likely to rise further this year as energy companies keep drilling. At 07:21 a.m. EDT on Tuesday, WTI Crude was down 1.37 percent at $69.76 and Brent Crude was down 1.13 percent at $75.31. Utilities were leading losses, down 1.5%, while financials and industrials were up by 1% and 0.6%, respectively.

Gold futures (http://www.marketwatch.com/story/gold-prices-held-back-by-surging-dollar-2018-05-08) lost ground, as the ICE U.S. Dollar Index (http://www.marketwatch.com/story/dollar-builds-on-its-run-to-four-month-highs-2018-05-08) continued its advance.

President Trump's announcement that he will withdraw the United States from the Iran nuclear deal sent crude oil prices up slightly.

The Loonie is getting a boost from the crude price increase as it climbs to 77.38 cents US.

The announcement weighed heavily on some hard currency bonds issued by Iranian neighbors Turkey and Iraq, as well as Lebanon, which suffered the biggest declines.

There's little risk priced in now and the summit between the two leaders planned for early June would only move the market if it's a spectacular failure, said McNally. That rate is now at 5.14 per cent.

Noticeably, a lot of this growth came from the transport sector with a surge in larger vehicle purchases as SUV and light trucks represented almost two-thirds of total USA sales in 2017 up from 47 per cent in 2011, according to IEA data. Australia's S&P/ASX 200 was unchanged at 6,092.60.

Commodity-linked and emerging market currencies slid on worries about the USA withdrawal, which would curb risk appetite in financial markets.

Japan's Nikkei 225 dropped 0.4 percent to 22,412.96 and South Korea's Kospi retreated 0.1 percent to 2,447.02. The Nasdaq fell 20 points, or 0.3 percent, to 7,245.

Stocks on Wall Street closed mixed. "This is a fight over controlling the crude market", Zamaninia said.

"The door is open to try again which is probably less harsh than what he could have said", Battle said. Energy shares gained 0.78 per cent and defence contractor stocks rose, with Lockheed Martin up 1.3 per cent and Northrop Grumman 3.3 per cent.

While some well-received earnings updates also provided support, shares in companies with exposure to Iran fell, with plane maker Airbus and auto makers Renault and PSA all trading down more than 1 percent.

At 09:15 GMT, US crude for June delivery rose by $2.05/bbl to $71.11/bbl, while Brent crude for July delivery was up by $2.19/bbl at $77.04/bbl, rebounding from sharp falls overnight.