On Tuesday, April 23, WTI crude oil prices increased by nearly 2%, surpassing $83 per barrel, thanks to optimism that weak manufacturing data might accelerate rate cuts.

Specifically, U.S. manufacturing activity hit a four-month low of 49.9 in April, according to the S&P Global Flash PMI. This figure is below 50, indicating contraction.

The increase in oil prices was fueled by this data as investors saw the slowdown in manufacturing as a potential support for the Federal Reserve to cut rates this year. Lower interest rates typically stimulate the economy and, consequently, support crude oil demand.

By the end of the trading session on April 23, WTI crude oil contracts rose by $1.46 (or 1.78%) to $83.36 per barrel. Year-to-date, WTI oil prices have climbed over 16%.

Brent crude oil contracts gained $1.42 (or 1.63%) to $88.42 per barrel, up nearly 15% since the beginning of the year.

Oil prices increased after WTI crude oil hit an intraday low of $80.89 per barrel early in the session, the lowest since late March 2024. WTI prices also briefly fell below the 50-day moving average of $81.22 per barrel for the first time since early February 2024.

WTI crude oil prices remain below the year’s peak of $87.62 per barrel as investors pushed prices higher due to concerns about the conflict between Iran and Israel. These concerns largely dissipated when both Iran and Israel signaled they were not interested in a broader war after engaging in reciprocal attacks earlier this month.

The oil market also largely discounted the threat of additional sanctions on Iran’s oil sector.

Helima Croft, Commodity Strategist at RBC Capital Markets, commented: “The White House will face a tough decision this summer on whether to impose sanctions or issue waivers due to concerns about tight oil markets. Sanctions, if fully enforced, could contribute to higher gasoline prices.”

However, analysts noted that this is an election year in the U.S., and the Biden administration will do whatever it can to ensure prices do not rise excessively.

Source: Vietstock