Extra OPEC+ cuts will be credit positive, as is Qatar's LNG carrier order
Highlights:
* OPEC+ is expected to bring forward its meeting to this Thursday.
* The current -9.7m b/d cuts are likely to be extended for at least two months.
* Most of the revenue gains from this action are likely to come in Q4 and 2021.
* Separately, Qatar's order of 100+ LNG carriers is a strong signal its North Field Expansion will move forward.
The expected decision to bring forward the OPEC+ meeting - likely to be confirmed shortly - would be a strong signal that the deepest output cuts (-9.7m b/d / -23% below the baseline) will be extended until at least August, rather than easing the cuts to -7.7m b/d. (In the age of Zoom meetings rather than face-to-face gatherings in Vienna, it's much easier to reschedule these events at short notice.) Bringing forward the ministerial meeting to Thursday June 4 (rather than Wednesday June 10, the date set back in April, with core-OPEC having been due to meet on the 9th), means that a decision will be formalized before several key members are scheduled to set their July sales prices, including Saudi Arabia on June 5. However, it also means that final secondary production data from sources such as Platts, used to clarify compliance levels in May, will not be available (preliminary BB estimates suggest generally good compliance except for the usual laggards, Iraq and Nigeria, both at well under 50% compliance). The change in date was proposed by Algeria, which holds the rotating presidency, and both Saudi and Russia appear to be happy with bringing it forward, suggesting that they are aligned. Even if the meeting isn't brought forward, the deeper cuts could still take place, with Saudi likely postponing its price setting, as it did in March and April - however the move would be an additional positive sign.
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