Oil Rises as Risk-On Mood Counters Waning Geopolitical Concerns

West Texas Intermediate rose to settle near $83 a barrel after fluctuating in a range of more than $2. Equities rallied following a report showing growth for US business activity was at the slowest pace this year. The weakening economic data is being interpreted as bullish for markets as traders parse clues for the Federal Reserve’s next move on lower interest rates.

Meanwhile, a slew of crude-market gauges have signaled traders are discounting the risk of further escalations in the Middle East. WTI’s second-month options skew has flipped back to its usual put skew as traders are now seeking to protect against price drops. And US crude pierced its 50-day moving average Tuesday for the first time since February, a move that could lead to additional selling.

After a bout of volatility, prices remain shy of yearly highs ahead of the US summer travel season that typically brings a swell of fuel demand. That has many analysts expecting further gains for prices later this year, even after a recent pullback. Traders also are turning their focus to the OPEC+ alliance’s next meeting on production, with the group’s recent supply cuts leading to a tighter market.

Futures are coming off back-to-back weekly losses, but remain higher this year amid geopolitical risks in the Middle East. The US House of Representatives moved to further curb Iran’s oil sector, though analysts anticipate a muted impact on exports.