Crude Closes Near Three-Year High as Focus Remains on Iran Deal

(Bloomberg) -- Crude settled near a three-year high as investors gauged the potential of a U.S. exit from the Iran nuclear deal.

Futures ended the session 0.2 percent higher, closing above $68 a barrel for a third time this week. French President Emmanuel Macron's prediction that the U.S. will pull out of the Iran nuclear accord stoked concerns about a renewal of sanctions that would slash crude exports from OPEC's third-largest producer. U.S. Defense Secretary Jim Mattis said Thursday that there's been no decision on the nuclear deal.

“We are pricing in some geopolitical risk,” said Bart Melek, head of global commodity strategy at TD Securities in Toronto. “There are concerns that we might get into a difficult conversation with Iran.”

Focus within the oil market remains on whether President Donald Trump will decide to reimpose sanctions on Iran in coming weeks. Meanwhile, the U.S. benchmark crude has averaged around $66 a barrel so far this month and analysts and traders surveyed by Bloomberg are bullish on U.S. futures as OPEC trims output against a backdrop of record American crude output.

West Texas Intermediate crude for June delivery rose 14 cents to settle at $68.19 a barrel on the New York Mercantile Exchange. Total volume traded was less than 1 percent below the 100-day average.

Brent crude for June delivery rose 74 cents to end the session at $74.74 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $6.55 premium to WTI.

Iran negotiated the agreement -- providing for curbs on its nuclear program in return for relief from many of the sanctions weighing on its economy -- with China, France, Russia, Germany, the U.K. and the U.S. in 2015. Regular assessments by the International Atomic Energy Agency since the deal took effect have found Iran in full compliance with its obligations.

OPEC and non-OPEC producers are continuing with their output cuts but “we've got the political risk of Iranian sanctions,” said James Williams, president of London, Arkansas-based energy researcher WTRG Economics. “We're fighting against the fundamentals of phenomenal growth here in the U.S. in production.”

Oil-market news

Gasoline futures added 1.1 percent to settle at $2.1123 a gallon on Thursday.
A fire at Husky Energy Inc.'s refinery in Superior, Wisconsin, has been extinguished after an explosion early Thursday that left multiple people injured, according to fire officials.
Canada's oil sands are getting a taste of their slower-growth future. Husky Energy Inc. on Thursday became the second big oil-sands producer to say that it throttled back first-quarter production in response to steeper discounts for Canadian crude.

--With assistance from Tsuyoshi Inajima Heesu Lee and Grant Smith

To contact the reporter on this story: Jessica Summers in New York at jsummers24@bloomberg.net.

To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net, Carlos Caminada, Will Wade