DTN Oil

WASHINGTON, D.C. (DTN) -- West Texas Intermediate futures on the New York Mercantile Exchange (NYMEX) and Brent crude traded on the Intercontinental Exchange advanced more than 1% on Tuesday in reaction to media reports indicating Organization of the Petroleum Exporting Countries (OPEC) and Russia-led producers are considering extending 2.2 million barrels per day (bpd) in output cuts to the end of the year to prevent oil inventories from building.

International crude benchmark Brent for April delivery moved higher after testing support at the $82.17 per barrel (bbl) 200-day moving average as investors reacted to the prospect of a longer-than-expected extension to OPEC+ production cuts. Citing several sources, Reuters reported that the 22-member coalition is not only considering extending current curbs through the end of June but is likely to keep them intact until the end of the year, signaling a shift towards a long-term strategy of supply management against a backdrop of lackluster global oil demand and surging U.S. shale production.

The physical oil market in recent weeks has been flashing signs of rapid tightening, with prompt-month Brent contract currently trading with a $0.64 bbl premium against the next-month contract.

Tuesday's move higher in the oil complex also follows an announcement by Russian officials that the country will impose a six-month ban on gasoline exports beginning March 1 to halt price increases and alleviate fuel shortages in its domestic market. The restriction could have also been triggered by unplanned refinery outages across Russia amid intensifying drone attacks by the Ukrainian military.

Moscow in recent months has gradually reduced petroleum product flows to international markets because of operational disruptions at some of the country's largest refineries. According to official figures, gasoline and diesel exports in January were reduced by 37% and 23%, respectively, from the same month in 2023.

Following an EU ban on Russian fuel imports from February 2023, most of Russia's gasoline and diesel flows have been redirected to Asia and the Middle East with China, United Arab Emirates and Türkiye emerging as major buyers of Russian oil products.

Also on Tuesday, oil traders await the release of weekly inventory report from the American Petroleum Institute, scheduled for a 4:30 p.m. ET release, followed by official data from the U.S. Energy Information Administration on Wednesday morning. Consensus of analysts and traders surveyed by the Wall Street Journal revealed commercial crude oil inventories in the United States likely rose for a fifth consecutive week, while gasoline and distillate stocks were expected to have declined.

Commercial crude stockpiles are seen to have risen by 1.5 million bbl to 444.5 million bbl in the week ended Feb. 23. Gasoline inventories are estimated to have fallen 1.3 million bbl, while stocks of distillates, mostly diesel fuel, are expected to have drawn down 2 million bbl. Refinery capacity use likely rose 1.1% to 81.7%, according to the survey.

At settlement, NYMEX WTI for April delivery rallied $1.29 to $78.87 bbl, while front-month Brent futures jumped $1.12 to $83.65 bbl. NYMEX March RBOB futures gained $0.0388 to $2.3444 gallon. Moving in the opposite direction, NYMEX March ULSD futures retreated $0.0167 to $2.7460 gallon.

Liubov Georges can be reached at liubov.georges@dtn.com.