Friday, March 6, 2020
1. Russia Kills Saudi Arabia’s Plans For Deeper Cuts
- Saudi Arabia was pushing OPEC+ to cut deeper, but Russia has refused and now the OPEC+ partnership is on the rocks.
- This was the least likely outcome from the meeting, with most analysts expecting some form of cut. “A week ago the prospects for a meaningful agreement seemed low…However, a different Russian stance seems to have emerged this week, with policy moved along not only by the approach of the OPEC+ meeting but also by last week’s sharp price falls and the spread of coronavirus into Europe,” Standard Chartered wrote in a note.
- OPEC’s Joint Technical Committee had increased its recommendation to between 0.6 and 1 mb/d, up from just 0.6 mb/d previously.
- OPEC has already made several cuts, along with involuntary outages, pushing collective output to a 10-year low.
2. LNG glut until mid-2020s
- The glut for LNG could last until the mid-2020s, according to data from Morgan Stanley.
- “2020 global gas oversupply looks materially worse than 2019, with nearly 50mt of excess LNG that needs to find a home – before accounting for any demand loss from the coronavirus in China,” the investment bank wrote.
- Morgan Stanley said that coal-to-gas switching in Europe could mop up about half of that excess, but that still leaves a surplus of 23mt (~3.1 billion cubic feet/day).