WTI slides as demand trumps all other factors

Oil prices fell on Monday due to rising tensions in the Red Sea and the Israel-Hamas conflict, with OPEC+ extending voluntary production cuts and demand sentiment taking a hit from an unusually mild winter. Brent crude was trading up 1.05% at $82.67, while West Texas Intermediate (WTI) was trading up 1.66% at $78.64.

OPEC+ agreed to extend its 2.2-million-barrel/day voluntary production cuts for another quarter, with this outcome already priced in ahead of time. Russia also announced plans to deepen cuts by over 470,000 bpd in the second quarter of this year, while easing export curbs.

Analysts do not view the extensions from the broader group as particularly impactful. Some analysts saw the brief increase in oil prices as a response to the Israel-Hamas conflict and the current stalemated ceasefire negotiations. As long as the cease-fire negotiations remain in a stalemate, crude is likely to either hover around current levels or come under further upward pressure.