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First Look - OPEC delays production increase by three months

Oil is trading slightly higher after OPEC delays output boost
- WTI has continued to trade in a relatively tight range between $68 and $72 since early November
OPEC+ delays production restart by three months (BBG)
- OPEC+ has delayed its plan to bring back production by three months as crude prices struggle with weak demand
- Before this delay, an increase of 180 MBbl/d was set to begin in January as OPEC slowly ramped up growth to 2.2 MMBbl/d by late 2025
- Saxo Bank’s head of commodities said, “OPEC+ is most certainly still in the ‘protect price’ mode, having kicked the can down the road for a third time”
- Even if OPEC does not bring any production back, the IEA forecasts oil markets to be in a surplus in 2025, which could lead to weaker prices
  - Any additional supply from OPEC will exacerbate the potential oversupply

Natural gas moved higher Thursday morning as weather forecasts showed a small increase in demand of 4 HDDs
- Yesterday’s price action settled at $3.043, up $0.001 from Tuesday for the January contract
- Analysts are expecting the EIA to report a 40 Bcf draw in underground gas storage today for last week
  - The reporting week includes the Thanksgiving holiday whereas the current reporting week(released Dec. 12) is expected to be a much larger ~160 Bcf draw due to the recent cold shot
Estimates for global LNG prices are rising (NGI)
- East Asian LNG prices were revised up to $12/MMbtu for 2024 by Morgan Stanley from $10 previously
- Analysts forecast a balanced market in 2025-26, but oversupply risks have been delayed to 2027-28
- JP Morgan analysts call for a higher-than-expected rise in European gas prices through the middle of next year