RenCap removes line from Rosneft note saying 10 million bpd cut would rebalance markets

MOSCOW (Reuters) - Renaissance Capital updated a note giving a readout on a call with Rosneft ROSN.MM to remove a line saying the Russian energy giant believed a cut in oil output by OPEC+ of 10 million barrels per day (bpd) would be sufficient to balance markets.

Renaissance Capital (RenCap) changed the line to: “Rosneft supports the statements made by President Vladimir Putin that a coordinated global production cut is required to rebalance the market and expects oil output will decline in many non-OPEC countries with above-average production costs anyway.”

“An expanded OPEC+ is meeting is scheduled for 9 April to discuss the potential cut of 10 mln bpd, according to Interfax.”

Rosneft did not respond to a Reuters request for a comment.

“The quote was open to interpretation,” said Alexander Burgansky, the author of the RenCap report. “That’s why we updated the report.”

OPEC and Russia will discuss record oil output cuts on Thursday to support prices hammered by the coronavirus crisis but talks are complicated by internal disagreements and the reluctance of the United States to join any action.

In the report, RenCap also said Rosneft ROSN.MM believes the drop in global oil demand is expected to bottom out in April while oil demand in 2020 would be 5 million to 7 million bpd lower than last year.

RenCap added that Rosneft may reduce its annual capital expenditure to below 700 billion roubles ($9.3 billion) from its latest estimate of 850 billion to 1 trillion roubles to support free cash flow generation.

Reporting by Anastasia Lyrchikova and Vladimir Soldatkin; Editing by Katya Golubkova and David Clarke