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First Look - OPEC+ may delay supply increase by three months

Oil is trading higher, extending gains from yesterday
- China’s top leaders will map out economic targets at a meeting next Wednesday in a move some hope could lead to additional stimulus
- Brazilian oil output has faltered, with production down 6% from the prior month and 8% year-over-year
- The US dollar is trading lower this morning, supporting commodity prices

OPEC+ could delay supply increase by three months (BBG)
- According to OPEC delegates, progress is being made toward an agreement to delay the plan to return supply to the market, potentially by three months
- The plan will be finalized at the next OPEC meeting to be held on Thursday
- OPEC originally announced the plan to begin returning supply in June but has been forced to delay due to weak demand growth and prices
- Even if the plan is delayed, OPEC oil production is still set to increase in 2025, with the UAE given the right to increase output by 300 MBbl/d

Natural gas prices moved lower for the second day after weather model changes showed another downshift in demand
- The 1-5 day window still shows cold in the east, but the pattern shifts to an above-average map through the following 10 days
  - The shift warmer pushes the estimate for December HDDs in between the 30 and 10 yr normal vs the more bullish ranking predicted last week (CWG)
Eastern US cold and lower Appalachian production has helped lift local basis like Dom S. (Eastern Gas South) and M-2
- The January Dom South contract is trading near -$0.45, up from -$0.70 in late September and up from -$0.90 in June
- The improvement isn’t just in the peak winter contract; the whole curve has been lifted since July
- Lower year-over-year production and the addition of the Mountain Valley Pipeline have contributed to the price improvement
- Many Appalachian producers are using their wells as synthetic storage by curtailing gas when local cash prices are low, thereby reducing supply to the market
- AEGIS notes that basis hubs in the area are currently trading at some of the highest curve values in some time (average curve price) and might be attractive to those looking to derisk their exposure