Negative comments diminish hopes for a new OPEC+ deal

GULF COUNTRIES - In Brief 05 Apr 2020 by Justin Alexander

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There have been new developments, both positive and negative, over the weekend on the prospects for a renewed (and greatly expanded) OPEC+ deal. The market may start to take a view on this early in the week, possibly as soon as Asian trading opens on Monday, with the potential for a significant impact on Gulf assets, including bonds and currency forwards, so we are providing a quick update on these developments. Key oil market developments since Friday (post our 3 Apr brief), in time order: Texas’s oil regulator Ryan Sitton told CNBC that there was 21% oversupply and he’d spoken to Russia’s energy minister and was willing to curb Texas’s production.There were reports that OPEC+ was considering a cut of 10m b/d, matching Trump’s Thursday tweet, and that Putin thought this was possible. The proposal may include Saudi cutting by 3m b/d (presumably to 9m, having ramped up from 9.8m b/d in March to 12m in April), Other Gulf producers (presumably largely UAE and Kuwait) would cut 1.5m b/d, Russia would cut 1.5m b/d, other OPEC+ members by 2m b/d and new participants, including the US, Canada and Brazil, a further 2m b/d (WSJ).Trump hosted oil CEOs at the White House, reiterating his hopes of Saudi/Russian action, but not formally asking the US firms to participate in a deal (CNN). Some majors like Exxon are understood to be opposed to cuts, as its the American Petroleum Institute lobby group, but some shale producers, with higher opex costs, favour action.The energy minister of Alberta, Canada’s main oil-producing province, said she would join the OPEC+ call, apparently with Trudeau’s blessing (CH).The OPEC+ call, requested by Saudi Arabia last Thursday, which had initially ...