May 9, 2018 / 5:53 AM / in a year

Shanghai oil futures hit record high, volumes after U.S. exits Iran deal

BEIJING (Reuters) - Shanghai crude futures hit their highest price since launching in late March on Wednesday, tracking big gains in global benchmarks after U.S. President Donald Trump pulled out of the Iran nuclear deal.

The contract for September delivery touched a high of 466.6 yuan a barrel and was trading up 1.2 percent at 464.8 yuan ($72.94) a barrel in early afternoon trade. (0540 GMT).

A record 113,045 lots, or 113 million barrels, exchanged hands by the midday recess, a record amount that more than doubled Tuesday’s trade. Open interest stood at 27,602 lots or 13.8 million barrels, also a record.

“The Trump move overnight injected a big new subject for trading and boosted interest from speculators,” said a trader with Mercuria, a regular participant in the new contracts.

The increasing correlation between the Shanghai contract and global benchmarks WTI and Brent boosted the confidence of market participants, although dealers say speculative retail investors are believed to be the main drivers to liquidity.

Wang Xiao, head of crude research at Guotai Junan Futures, said the prospect of supply cuts from Iran could lead to a widening spread between Shanghai futures over U.S. crude WTI as the majority of crude slates traded at the Shanghai exchange are from the Middle East.

The United States plans to impose new unilateral sanctions after abandoning the agreement, which limited Iran’s nuclear ambitions in exchange for removing joint U.S.-Europe sanctions.

Reporting by Meng Meng and Chen Aizhu; editing by Richard Pullin

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