By Helen Clark MELBOURNE, May 6 (Reuters) - Oil was little changed at open on Wednesday morning after a volatile session on Tuesday with U.S. crude oil inventories falling for a third week in a row as the shaky Middle East ceasefire held.

Oil prices dropped sharply after a Pakistani source said the US and Iran are close to an initial peace deal, easing tensions in the Strait of Hormuz.

US oil prices fell nearly 10% on Wednesday after news that a peace deal could be close. Stocks jumped and bond yields tumbled.

The cryptocurrency rally followed a sharp decline in oil prices, with WTI and Brent crude falling more than 6% each. ・The U.S. dollar weakened, with the Dollar Index down 0.5% on the day and over 2% in the past month.

By Lawrence Delevingne and Harry Robertson May 6 (Reuters) - Stocks surged to fresh records and oil prices dropped on Wednesday after a report that the United States and Iran are closing in on an agreement to end their war,

Oil prices eased back on Wednesday after Donald Trump said he was pausing ‘Project Freedom’, the US operation to guide ships through the vital Strait of Hormuz, as progress was being made towards a peace deal with Iran.

Although stocks have rallied sharply, volatility in energy and bond markets could weigh on global growth. Oil prices are around 35% higher than they were when the conflict ⁠began in ⁠late February, while 10-year Treasury yields are around 40 bps higher.

Oil prices extended losses after President Trump held off on a planned U.S. attack on Iran, easing fears of an imminent escalation.