Oil & Gas Sector News - OPEC and partners agreed to cut production by ca. 10%
As it was already rumoured last week, OPEC and its partners have agreed a new production cut deal. Thus, with a strong support of the US president and other G20 countries, OPEC, Russia and nine other large oil producers have inked a new deal aimed at stabilising the global oil market, which continues to suffer from the covid-19 outbreak. The group of 20 countries will voluntarily cut 9.7 mn boe/d of crude oil output (ca. 9.7% from January 2020 level) in May and June. In the second half of 2020 the cut will be reduced to 7.7 mn boe/d and between January 2021 and April 2022 the cut will be further reduced to 5.8 mn boe/d. Additionally, US output is expected to decline by some 2 mn boe/d by the end of 2020, according to the US energy secretary. The agreed production cut is too small in comparison with the estimated decline of global oil consumption in April (based on statements made by leading global oil trades up to one-third of demand might have been lost due to covid-19) and we expect the oil market to be heavily oversupplied in April-June. This could explain the initial decline of oil price yesterday. However, in the longer run, the new deal should help reduce global oil inventories and strengthen the oil price, assuming that global demand shows first signs of recovery already in 2H 20 and reaches pre-covid levels by the middle of 2021e. Consequently, we have revised upwards our price forecast for Brent by USD 5/bbl in 3Q and 4Q 2020e to USD 40/bbl and USD 45/bbl. We see the new production cut deal as supportive for companies with a higher exposure to the upstream segment (i.e. OMV and OMV Petrom).Grupa Lotos is an oil concern which deals with oil extraction and processing and trading of high quality oil products. Co. supplies the market with, unleaded petrol, diesel oil, fuel oil, aviation fuel, industrial oil, asphalt and paraffin, among other things. Co. is engaged in the production and sales of engine oils and bitumen in Poland. Co. maintains oil exploration and production activities in the Baltic, North Sea and Norwegian Sea and operates three refineries in Gdansk, Jaslo and Czechowice, Poland. Co. markets its products in wholesale markets, as well as in retail markets through a network of petrol stations.
Jinduicheng Molybdenum and its subsidiaries are engaged in the manufacture and sale of molybdenum ore, molybdenum smelting series and its environmental protection products, molybdenum chemical series products, mineral products and other metal products; overseas investments; power operation; manufacture of industrial sulfuric acid; sale of chemical products and non-metal mineral products; and provision of general cargo transportation services.
Magyar Olaj-Es Gazipari is an integrated oil and gas enterprise based in Hungary and active in central and eastern Europe. Co.'s core activities include: exploration and production of crude oil, natural gas and gas products; refining, transportation, storage and distribution of crude oil products in both retail and wholesale markets; importation, transportation, storage and wholesale trading of natural gas and other gas products; and the production and sale of olefins and polyolefins. TVK, the petrochemical affiliate of Co., is an olefin and polyolefin producer in Hungary.
OMV is an international energy company with activities in Exploration and Production (E&P), Refining and Marketing including petrochemicals (R&M), and Gas and Power (G&P). Co. explores and develops oil and gas resources and supply energy to over 100 million people. OMV has three operating segments: Exploration and Production (E&P), Refining and Marketing, including petrochemicals (R&M), and Gas and Power (G&P), as well as the segment Corporate and Other (Co&O).
Polski Koncern Naftowy Orlen's activities are divided into three main business segments: the Refining Segment that comprises crude oil processing as well as wholesale and retail trade in refinery products. The Petrochemical Segment that encompasses production and sale of petrochemicals and chemicals. The Retail Segment that comprises of sales at petrol stations. Co.'s basic products include gasolines, diesel oils, light heating oil, Jet fuel, liquid gas, polyetylene, polypropylene, benzene, butadiene, acetone, phenol, glycols, toluen, ortoxylene.
The Institutional Equity Research team of Raiffeisen Bank International AG covers 85 stocks from Austria, Central & Eastern Europe with sell-side research and thus levers our local broker status with excellent company relationships. For corporates in Austria, CEE and Western Europe, we offer co-sponsored research, which includes research coverage and marketing activities to investors. Additionally, through our Spotlight Research product we also shed light on leading European small and micro-caps, seeking greater visibility with investors.
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