Oil steadies ahead of OPEC+ meeting

Singapore — 0155 GMT: Crude oil futures were steady to marginally higher in mid-morning trade in Asia June 2 as traders looked toward a possible extension of output cuts by OPEC+ in an upcoming meeting.

At 09:55 am Singapore time (0155 GMT), ICE Brent August crude futures were up 19 cents/b (0.50%) from June 1's settle at $38.51/b, while the NYMEX July light sweet crude contract was 8 cents/b (0.23%) higher at $35.52/b.

"Expectations of an extension of the current supply cuts by OPEC+ when they meet this week is keeping prices buoyed," OCBC analysts said in a note Tuesday.

"If OPEC+ can deliver on the reported extension, we expect Brent to possibly test $40/b," the analysts added.

US President Donald Trump and Russian President Vladimir Putin spoke June 1 about the importance of implementing the OPEC+ oil supply cuts and stabilizing global oil prices, the Kremlin said in a statement.

"It was stated that this multilateral agreement, reached with the active support of the presidents of Russia and the United States, would lead to a gradual restoration of oil demand and price stabilization," the Kremlin said.

The OPEC+ accord calls for 9.7 million b/d in production cuts for May and June, before easing to 7.7 million b/d for the second half of the year, then to 5.8 million b/d for January 2021 through April 2022.

"A confirmation of the meeting along with suggestions from members on the willingness to comply may be necessary to keep prices thriving at current levels. Any leap through the resistance zone may still boil down to demand," IG market strategist Pan Jingyi said in a note June 2.

Apart from OPEC+ commitment, investors have been monitoring Chinese demand recovery and US product demand, along with any fresh developments in the US-China trade tensions.

The OPEC+ meeting may be moved up to June 4, from the scheduled June 9-10, so July nominations can factor in any changes to oil production quotas, S&P Global Platts reported earlier citing sources familiar with the discussions.