New York — Oil futures swung into negative territory in Wednesday morning trading, as the market weighed supply and demand balances in the wake of an Iranian missile attack overnight on US bases in Iraq.
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At 1511 GMT, ICE March Brent was down 54 cents at $67.73/b and NYMEX February WTI was 75 cents lower at $61.95/b.
Oil prices surged overnight after Iran launched missiles striking two US military basis in Iraq, signaling a further escalation of geopolitical tensions. Front-month March ICE Brent crude oil futures surged more than $3/b to hit a high of $71.75/b at Wednesday's Asia open, but the market later retreated from these highs and fell below Tuesday's close just prior to the US market open.
"Because there is no immediate supply disruption, some geopolitical risk priced into the marketafter the attack on those two bases came out right away," Tradition Energy analyst Gene McGillian said. "Now we have to wait and see if we have another escalation that does disrupt the supply and demand balance, but the market is signaling now that that is not in the cards."
US President Donald Trump is expected to make a statement from the White House at 11 am EST (1600 GMT).
Iranian Foreign Minister Javad Zarif, in a tweet Wednesday, said "Iran took & concluded proportionate measures in self-defense under Article 51 of UN Charter targeting base from which cowardly armed attack against our citizens & senior officials were launched."
Iranian state TV separately said Tehran had started an attack on US facilities in Iraq in retaliation for last week's US drone strike in Baghdad that killed General Qassem Soleimani, leader of Iran's Islamic Revolutionary Guard. Bases in Ain al-Asad and Erbil were attacked, a spokesman for Revolutionary Guard said, according to Tasnim news agency.
The market are also be looking to the US inventory data release from the US Energy Information Administration at 10:30 am EST.
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