Oil prices extend rally

Oil prices rallied further yesterday, reaching fresh 3.5-year highs, as US President Donald Trump’s decision to tear up the Iran nuclear deal risks contributing to a tightening of crude supplies, reports AFP from London. While broadly expected, the president’s announcement earlier this week over Iran, a major producer of crude oil, has helped light a fire under the commodity, with both main contracts now sitting at highs not seen since the end of November 2014 and speculation they could go even higher. “In the aftermath of Donald Trump’s announcement on the Iran nuclear deal, oil has continued to rally on Thursday although the gains the are being made are now slowing,” noted Craig Erlam, senior market analyst at Oanda trading group. “While it remains unclear what impact the sanctions—which are not backed by the other countries that signed up to the initial agreement—will have on output, the moves we’ve so far seen suggest there is a belief it will be significant.” Trump’s decision Tuesday meanwhile came as data shows US stockpiles are dwindling, major producer Venezuela is wracked by economic upheaval, and OPEC and Russia press on with an output cap. On other markets Thursday, stocks diverged and the dollar fell against rivals. In London, traders awaited updates from the Bank of England due 1100 GMT on UK interest rates and its latest economic forecasts. Markets now do not expect the BoE to hike it main lending rate in the wake of recent data pointing to slower growth in Britain as the country prepares for Brexit. “The BoE is due to announce its decision on interest rates... and, following an apparent U-turn in recent weeks, policy makers are widely expected to leave them unchanged for now,” said Erlam.