Crude oil futures retreat as doubt lingers around talk of further supply cuts

Singapore — 0242 GMT: Crude oil futures retreated from overnight highs during mid-morning trade in Asia Friday on lingering doubts of a potential supply cut, with the US, Saudi Arabia and Russia having provided mixed indications on the matter.

At 10:42 am Singapore time (0242 GMT), ICE Brent June crude futures were down 71 cents/b (2.37%) from Thursday's settle at $29.23/b, while the NYMEX May light sweet crude contract was 99 cents/b (3.9%) lower at $24.34/b.

Prices retreated in Asia trade Friday after settling substantially higher on Thursday, as optimism took a back seat after Russia denied speaking with Saudi Arabia on increasing supply cuts.

Crude futures have soared Thursday after US President Donald Trump tweeted that he had spoken by phone with Saudi Crown Prince Mohammed bin Salman, who in turn had called Russian President Vladimir Putin to broker a deal.

But a Kremlin spokesman Dmitry Peskov denied that Putin had spoken with Crown Prince Mohammed, Russian news agency RIA Novosti reported. "No, there was no such conversation," Peskov said.

President Donald Trump had tweeted expectations of Saudi Arabia and Russia cutting back crude production by approximately 10 million barrels per day.

Saudi Arabia on Thursday had called for an "urgent meeting" of the OPEC+ alliance and other producers to negotiate a deal on output cuts that could stem the coronavirus-induced free fall in oil prices.

"Expect short-term volatility to sustain as OPEC+ moves are scrutinized in the coming days," IG market strategist Pan Jingyi said in a note on Friday.

"Even if the price war does conclude, scepticism [will] perhaps remain on the depth of 10 million b/d. This is as forecasts of 10 million to 20 million b/d drop in demand for April sloshes around," Pan added.

Russian energy minister Alexander Novak also said on Thursday that a coordinated OPEC+ production cut would not be enough to compensate for the fall in demand caused by the coronavirus pandemic, which he said could reach 20 million b/d.

The number of coronavirus cases continue to climb, with more than a million cases registered globally as of Friday, according to media reports.

Crude demand is expected to remain low as refiners reduce operating rates because of depressed margins and travel restrictions.