ICE Brent crude futures rally above $40/b amid OPEC+ optimism

0210 GMT: Crude oil futures were trading higher in mid-morning trade in Asia June 3, with the prompt-month ICE Brent contract rallying above $40/b amid optimism that OPEC+ would extend its supply cuts.

At 10:10 am Singapore time, ICE Brent August crude futures were up 64 cents/b (1.62%) from June 2's settle at $40.21/b, while the NYMEX July light sweet crude contract was 85 cents/b (2.31%) higher at $37.66/b.

"Crude oil prices gained as OPEC looked to extend its current level of production cuts," ANZ analysts said in a note June 3.

Optimism emerged ahead of the upcoming OPEC+ meet, which may be brought forward to a June 4 online meeting, although this has still not been formally scheduled. Still, the anticipation is keeping prices supported for now.

"Reports suggest the group has agreed to a one-month extension of the 23% cut to output. The original agreement had the cut to production falling to only 17% from the start of July," the analysts at ANZ added.

However, the market remains braced for any unfavorable outcome from the OPEC+ meeting.

"The meeting will be a success if Russia and Saudi Arabia show evidence of their commitment to coordinated action, whether through a one-, two- or three-month agreement extension," AxiCorp chief global markets strategist Stephen Innes said in a note June 3.

Earlier reports on Russia's committment to supply cut extensions have been mixed, leaving room for uncertainty going into July.

"It would be detrimental for sentiment if an extension is not agreed... the challenge for OPEC+ is the availability of hard data to judge the market in terms of OPEC+ compliance and non-OPEC production curtailment or underlying demand recovery," Innes added.

Apart from supply drivers, ongoing US-China trade tensions remain as a backdrop. Escalating protests in the US over the death of George Floyd in police custody also clouded overall economic recovery.