WTI edges lower to $78.30 following reports of OPEC+ extending voluntary oil output cuts

West Texas Intermediate (WTI) oil prices decline after two consecutive days of gains, with trading around $78.30 per barrel during the Asian session on Wednesday. The oil market is facing challenges due to higher borrowing costs, which are dampening global economic growth and subsequently reducing oil demand. Additionally, uncertainty persists regarding the outcome of ceasefire talks between Israel and Hamas, while Iran-backed Houthis continue to target civilian shipping vessels in the Red Sea.

Crude benchmarks received upward support following a Reuters report stating that the Organization of the Petroleum Exporting Countries and allies (OPEC+) are contemplating extending voluntary oil output cuts into the second quarter. In November, OPEC+ had agreed to voluntary cuts amounting to around 2.2 million barrels per day (bpd) for the first quarter of this year. Additionally, Russia has announced a six-month ban on gasoline exports starting from March 1. This decision, as reported by Russia’s RBC, is aimed at stabilizing oil prices.

However, persistent geopolitical supply risks in the Middle East, coupled with indications of a stronger US physical market, are helping to mitigate the effect of the concerns about global oil demand. As a result, the decline in Crude oil prices is being limited. Recent data reveals an increase in demand for US crude exports, while Chinese buyers are actively participating in the spot market following the Chinese Lunar New Year, boosting Crude oil consumption.

American Petroleum Institute (API) revealed that Weekly Crude Oil Stock increased to 8.428 million barrels for the week ending on February 23, from the previous 7.168 million barrels. Furthermore, the US Energy Information Administration (EIA) is expected to report a decline in the Crude Oil Stocks Change on Wednesday.