Dubai crude futures edge higher on questions over the US-Saudi-Russia alliance

Singapore — Benchmark Dubai crude futures rose in mid-morning trading in Asia on Friday after comments from US President Donald Trump overnight suggested a new production cut alliance may be on the cards with heavyweight producers Saudi Arabia and Russia.

However, the upward momentum was limited after Russia denied speaking with Saudi Arabia on increasing supply cuts.

By Friday morning in Asia, Dubai futures had traced the overnight climb in oil markets, but in a somewhat muted manner, pricing in Russia's official statement after initial optimism had worn off.

At 11 am Singapore time (0300 GMT), the front-month June Dubai futures contract was pegged at $32.11/b, up $1.93/b from its assessment at $30.18/b at 4:30 pm (0830 GMT) Thursday.

Still, traders mulled over other considerations related to the execution of such a deal in the near future, such as the quantity of crude oil that could realistically be taken off the market.

Going forward, any deal to cut production is unlikely to be successful without the mutual cooperation of the US, Russia and Saudi Arabia, the world's top three oil producers, traders in Asia said.

But the absence of a precedent where the US has joined production cut accords remain a major detractor to the realistic execution of such a deal

But the absence of the US precedent in joining production cut accords remained a major detractor to the realistic execution of such a deal, they said.

"10 million b/d to 15 million b/d of cuts does not look like a realistic figure, even including the US," a Singapore-based trader said Friday morning.

"It is unclear if they [the US] will join in this cut," the trader pointed out.

Dubai's premium to ICE Brent crude futures narrowed mid-morning Friday in Asia with Brent's rise overshadowing that of Dubai futures. The June Brent/Dubai Exchange of Futures for Swaps spread was pegged at minus $3.05/b at 0300 GMT Friday, up from minus $3.29/b at 0830 GMT on Thursday.

Oil markets trading overnight surged on optimism related to US President Donald Trump's comments of a potential supply cut agreement, but gains pared by the time markets opened in Asia early Friday, with both the ICE Brent futures and WTI receding from their Thursday settles.

US President Trump tweeted that he had spoken by phone with Saudi Crown Prince Mohammed bin Salman, who in turn called Russian President Vladimir Putin to heal their oil market rift.

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.

"I expect and hope that they will be cutting back approximately 10 million [b/d], and maybe substantially more, which, if it happens, will be GREAT for the oil and gas industry!" Trump tweeted on Thursday, adding later that the cuts could even be as high as 15 million b/d.