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Oil rally cools on OPEC+ cut and manufacturing slowdown

On Tuesday, oil prices increased slightly in early Asian trading as the market evaluated the surprise output cut by OPEC+ and concerns about economic growth due to weak manufacturing indicators worldwide.

Crude prices surged to multi-month highs on Monday after OPEC+ announced a reduction in output of over 1.6 million barrels per day, indicating a tighter supply in the coming months. However, this was accompanied by weak manufacturing data from various countries, leading to concerns that economic slowdown could affect crude demand this year. Brent oil futures rose 0.2% to $85.03 a barrel, and West Texas Intermediate crude futures rose 0.2% to $80.58 a barrel. Data from major economies showed that manufacturing activity contracted in March, raising doubts about oil demand recovery as economic conditions deteriorate globally. China's manufacturing sector, which acts as a bellwether for the world's second-largest economy, is facing increased headwinds from slowing overseas demand. Analysts at ING warned that pinning expectations of demand growth on one country - China - presented a risk to markets. The fear of a banking crisis and a potential economic slowdown continued to weigh on crude prices this year despite the surge on Monday.

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