Singapore — Benchmark Dubai crude futures were cautiously higher in mid-morning trades in Asia Thursday, ahead of a high-stakes OPEC+ meeting later in the day where ministers from OPEC, Russia and nine other producers are likely to settle geopolitical scores and parcel out production cuts.
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At 11 am Singapore Thursday (0300 GMT), June Dubai futures were pegged at $34.16/b, up 45 cents/b from the $33.71/b assessment at the 4:30 pm (0830 GMT) close of trading in Asia Wednesday.
However, intermonth spreads and Dubai futures' premium over ICE Brent moved lower Thursday morning, implying a sense of uncertainty and mixed sentiment regarding the upcoming meeting, said crude traders in Asia.
"It's really the only thing to talk about" in the market, according to a crude trader based in Singapore.
Sentiment for Middle East sour crude trading remained muted, according to traders in Asia on Thursday.
"Regardless of what happens in today's meeting, the market will remain weak for a few months," said the trader.
"We need to see a cut back in production as spoken about by producers and in Asia we need to see the big OSP cuts as well," he added.
Middle East crude buyers in Asia are anxious to receive notice of fresh official selling prices once the OPEC+ dialogue is concluded. The OSPs will provide important cues for the direction of the June trading cycle, which is set to kick off once a decision on production and price cuts is finalized.
At 11 am, the June Brent/Dubai Exchange Futures for Swaps spread was pegged at minus 85 cents/b, sharply narrowing from its assessed level of minus $1.74/b on Wednesday.
ICE Brent futures gained ground as rhetoric emerged from Russia and Kuwait overnight to provide some cues for the upcoming meeting, which will be held online via webinar.
The 23-country OPEC+ alliance is aiming for a global output cut pact totalling 10 million to 15 million b/d, including producers outside the group, when ministers meet Thursday for a critical summit to shore up the coronavirus-stricken market, Kuwaiti oil minister Khaled al-Fadhel told S&P Global Platts in an interview Wednesday evening.
Many details still remain in flux, but all OPEC+ members are committed to clinching a deal, Fadhel said.
Additionally, comments emerged from Russian officials stating the country was willing to cut production, provided output was measured from Q1 2020.
Russia is willing to cut crude output by 1.6 million b/d, if other producers cut a similar proportion of their output, Russia's Tass news agency reported Wednesday, citing a source at the energy ministry.
"Yes we are willing to cut 1.6 mil b/d, I confirm," the source said, adding that the cut should be calculated against output in the first quarter.
Russia's crude and condensate output in January through March was 140.351 million mt, or around 11.305 million b/d.
The emergency meeting is scheduled to start at 1400 GMT. It had originally been scheduled for Monday but was pushed back to give countries more time to hammer out an agreement.