Crude oil prices are set to post their second monthly gain in a row after a period of losses last year, with traders anticipating an extension of the OPEC+ production cuts.

That extension would contribute to a perception of a tightening oil market that has served to keep oil prices elevated for most of the past two months.

Brent crude has gained some 2% since the start of February, according to Bloomberg, while West Texas Intermediate has gone from some $72 per barrel at the start of the month to over $78 per barrel as of Wednesday.

In addition to the OPEC+ cuts, another factor supporting oil prices has been the situation in the Red Sea, which continues to be virtually closed for shipping, meaning the rerouting of hundreds of vessels and higher demand for bunkering fuel.

On the other hand, prices this week slipped after both the API and the EIA reported weekly builds in crude oil inventories, deepening already present concern about oil demand in the largest consumer, despite inventory draws in gasoline and diesel fuel.

ING said in a note about inventory moves that after two consecutive weekly draws, gasoline stocks have slipped below the five-year average. Distillate fuel stocks are already below that average and have been there for about a year now.

"Large stockpiles heightened investors' worries over a slow economy and reduced oil demand in the U.S.," Rakuten Securities analyst Satoru Yoshida told Reuters.

On the other hand, looking forward, “You’re hearing the phrase ‘upside risk’ a lot more than you have in the past couple of years,” the chief economist of Trafigura Group, Saad Rahim, told Bloomberg.

Interest rates in the U.S. and consumption projections in China remain the top factors to watch for traders and analysts who track demand trends, while OPEC+ and U.S. shale are the focus when it comes to supply.