Raid on Iraq Shakes Up Oil Market : Energy: News of the attack sends crude futures zooming. But prices retreat as calm prevails later in the day.

The U.S. bombing foray into Iraq sent oil prices on a chaotic ride early Wednesday, but prices closed only modestly higher after it became clear that the attack was limited.

In morning trading, prices of light, sweet crude oil for February delivery shot 46 cents higher to $18.84 a barrel as U.S. and allied warplanes launched the attack. But prices retreated as traders began taking profits, finishing the day 12 cents higher at $18.50 on the New York Mercantile Exchange.

“It’s high-volume chaos out there,” said Peter Gignoux, head of the London energy desk at brokerage Smith Barney, Harris Upham.

The oil market, rocked by worries that a new Persian Gulf crisis could reduce supplies, was calmed when Iraq said it would comply with two key United Nations demands that had sparked the confrontation.

Crude oil for later delivery followed a similar pattern. March crude settled at $18.69, up 13 cents. March’s low was $18.35, and the high was $19. Later deliveries were 14 cents to 17 cents higher.

The market rallied to its high after Bush Administration sources said allied warplanes had launched raids on Iraq in retaliation for Baghdad’s continued violations of Gulf War cease-fire terms.

“The market has been looking for a reason to go up, and it chose war,” said Gignoux, referring to the immediate reaction to the raid.

Traders bid crude futures higher as it appeared an attack could endanger crude supplies and sold them when it was clear that the speed of the attack made such a disruption unlikely.

“There’s an old saying in commodity trading: ‘Buy the rumor and sell the fact,’ ” said Andy Lebow, a trader with E. D. & F. Man International Futures in New York. “And I think that’s what we saw today.”

The conflict did not seem to threaten Kuwaiti or Saudi oil fields. Iraq has been barred from exporting oil by a U.N. embargo imposed after that nation’s invasion of Kuwait in 1990.

Once worries eased about Wednesday’s raid, traders could turn their attention to the market’s excess supply.