Crude oil futures dip as doubt lingers around OPEC+ talks

Singapore — 0224 GMT: Crude oil futures were trading lower in mid-morning trade in Asia on June 4 as uncertainty crept up on the market amid reports that OPEC+ talks were bogged down over quota compliance.

At 10:24 am Singapore time, ICE Brent August crude futures was 47 cents/b (1.18%) lower from the settle on June 3 at $39.32/b, while the NYMEX July light sweet crude contract was 69 cents/b (2.1%) lower at $36.60/b.

OPEC+ had floated the idea of moving forward the meeting to June 4, from its previously scheduled June 9-10, but no announcement has been made so far as compliance discussions continue.

Saudi Arabia is insisting on firm commitments from other members to stick to their production quotas, according to multiple sources involved in the discussions, Platts reported previously.

Those who have violated their quota caps are being pressured to slash output by the volume exceeded in the coming months to compensate for this, the sources told Platts.

"Saudi Arabia and Russia are demanding that fellow members stop cheating on quotas before any agreement is reached," ANZ analysts said in a note June 4.

"This has taken an early OPEC+ alliance meeting off the table, with the originally scheduled one for June 9-10 also at risk," the analysts added.

The recent price rally has also raised concerns over whether shale production will rebound.

"The main problem for OPEC+ is not so much compliance from small producers, rather its the potential for shale production to rebound," AxiCorp's chief global markets strategist Stephen Innes said in a note June 4.

"The sharper price recovery has raised some concerns among OPEC+ producers that highly price-agile US producers will turn on the taps quickly and eat into OPEC+ share of the pie," Innes added.

Meanwhile, US commercial crude stocks fell 2.08 million barrels to 532.35 million barrels during the week ended May 29, US EIA data released June 3 showed.

Nonetheless, this was offset by indications of still tepid demand, analysts said. Total product supplied -- a proxy for refined product demand -- fell 890,000 b/d to 15.07 million b/d during the period, the EIA data showed.