By Arathy Somasekhar

HOUSTON (Reuters) -Oil prices edged up more than $1 on Tuesday as sources say producer group OPEC+ is considering extending voluntary oil output cuts into the second quarter to provide additional support.

futures rose 99 cents, or 1.2%, to $83.52 a barrel at 1:48 p.m ET (1848 GMT). U.S. West Texas Intermediate crude futures (WTI) were up $1.24, or 1.6%, at $78.82.

OPEC+ could also keep the additional cuts in place until the end of the year, two of the sources told Reuters.

“We are going to see some tight supplies down the road,” said Dennis Kissler, senior vice president of trading at BOK Financial.

“OPEC is looking for mid-80s, may be around $85 a barrel on Brent. If we stay below that, they will curtail production all the way to the year end,” Kissler added.

Also supporting prices on the supply side, Israel and Hamas, as well as Qatari mediators, all sounded notes of caution on Tuesday about progress towards a truce in Gaza, after U.S. President Joe Biden said he believed a ceasefire could be reached in under a week to halt the war for Ramadan.

Yemen’s Houthi spokesperson said the group’s operations in the Red Sea would stop only when Israeli “aggression” against Gaza ends. Houthi missile and drone attacks on international shipping have driven up the cost of transporting energy products and contributed to a tighter market.

Meanwhile, crack spreads, CL321-1=R, a proxy for refining margins, rose to their highest in more than five months in a sign that fuel demand could be rising.

Markets expect to see some improvement in Chinese oil demand as improving travel demand over the Lunar New Year holiday outweighed worries of slowing macro-economic indicators.

Also on Tuesday, Russian authorities announced a six-month ban on gasoline exports from March 1 to compensate for rising demand and to allow for refinery maintenance.

Global crude oil markets are expected to be fairly stable this year at around $80 a barrel, Russel Hardy, chief executive officer of oil and gas trader Vitol, said.

Speaking at the Energy Institute conference, Hardy also said global oil demand was expected to peak in the early 2030s.

Both oil benchmarks had settled more than 1% higher on Monday after declines of 2-3% over the previous week as markets factored in a greater likelihood that cuts to interest rates might take longer to come than previously expected.

The American Petroleum Institute industry group’s weekly inventories data is due to be released at 4:30 p.m. EST (2130 GMT).