Crude oil futures dip as tensions ease; looks to fresh cues

Singapore — Crude oil futures were lower during mid-morning trade in Asia Friday as geopolitical tensions in the Middle East eased and market participants look for fresh price cues to provide direction.

At 10:38 am Singapore time (0238GMT), the front-month March ICE Brent crude futures slipped 18 cents/b (0.28%) from Thursday's settle at $65.19/b, while the NYMEX February light sweet crude contract was 18 cents/b (0.3%) lower at $59.38/b.

"Risk appetite continues to improve as investors judged the US-Iran tensions to not be as concerning as thought, while focusing on the upcoming leads including US-China trade and a potential payrolls surprise into the end of week," IG's market strategist Pan Jingyi said.

While US President Donald Trump's speech post the missile attack on US bases at Iraq de-escalated tensions between the US and Iran, the House of US Representatives voted to prevent President Trump from taking further military action against Iran, which further helped to ease tensions.

According to media reports, The House of Representatives approved a resolution that would need President Trump to seek consent from Congress before taking new military action against Iran.

"With the House Democrats passing a measure to limit Trump's war power against Iraq, it would severely restrict his commander in chief forces," Stephen Innes, chief Asia market strategist at AxiTrader wrote in a note Friday.

"And we would see the middle east war risk premium fade to dust," he added.

Meanwhile, other countries including South Korea said this week that it's ready to release its strategic reserves as part of efforts to take every possible measure to secure stable crude oil supplies and stem an increase in domestic oil prices, a senior government official said this week.

"The government will consider releasing its strategic oil reserves in case the country faces disruptions in crude supplies from the Persian Gulf, and take other emergency steps to avoid any fallouts from the escalating tensions in the Middle East," the official at the Ministry of Trade, Industry and Energy said this week.

"So, with Brent at $65/b, the market is probably not fully pricing in supply risk factors. With this risk skewed to the upside and the chance of proxy or rogue threat of disruption to physical supply still elevated, we could see a floor start to build around current levels," AxiTrader's Innes wrote.

"At the same time, traders will now turn the focus back on the relatively pedestrian views around trade and data, which remain positive for oil."

As of 0238 GMT, the US Dollar Index was unchanged at 97.155.

--Avantika Ramesh, avantika.ramesh@spglobal.com

--Edited by Norazlina Juma'at, norazlina.jumaat@spglobal.com