Crude inches up after overnight slide; cautious optimism sets in

Singapore — 0205 GMT: Crude oil futures were trading slightly higher in mid-morning trade in Asia on June 9 following an overnight slide, with sentiment remaining cautiously optimistic after the OPEC+ supply cut extension.

At 10:05 am Singapore time, ICE Brent August crude futures was 49 cents/b (1.20%) higher from the settle on June 8 at $41.29/b, while the NYMEX July light sweet crude contract was 50 cents/b (1.20%) higher at $38.69/b.

The oil complex had settled lower June 8 as global supply forecasts increased despite a one-month extension of the OPEC+ output cuts.

Prices subsequently picked up in June 9 mid-morning trade against the backdrop of continued supply-demand rebalancing, but analysts remained cautious about the outlook.

"Oil bulls remain optimistic that the March gap [of] lower [demand] will be filled over the summer. But OPEC trust will need to be verified, and macro dominos will need to fall in place," AxiCorp's chief global markets strategist Stephen Innes said in a June 9 note.

Saudi Arabia Prince Abdulaziz had said that an additional 1.2 million b/d of voluntary cuts undertaken by Saudi Arabia and Gulf allies the UAE and Kuwait in June would not continue in July.

"The market was disappointed that Saudi Arabia decided not to also extend an extra 1 million b/d cut that it had implemented beyond the agreed quotas," ANZ analysts said in a June 9 note. "This was exacerbated by news that Libyan supply would re-enter the market, after unrest in the country eased."

Libya's 300,000 b/d Sharara oil field, which was shut for almost five months due to an oil blockade, had restarted on June 6, Platts had reported. Initial production was only around 20,000 b/d, but output is expected to gradually ramp up in the coming days, sources told Platts.

US shale production also remained a key factor to watch, in response to supported prices amid the OPEC+ supply cuts.

"US production complicates the rebalancing issue... traders get jittery and continue to book profits around WTI $40/b; Unquestionably, there is some concern about the supply response from US shale producers," Innes said.