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First Look - OPEC cuts oil demand growth forecast again

Oil is trading higher by nearly $1, despite demand concerns and strong dollar
- WTI prices are reversing some losses from yesterday despite another downward revision in OPEC demand forecasts and an extension of the rally in the US dollar
OPEC cuts oil demand growth forecast (BBG)
- OPEC reduced its forecast for oil demand growth in 2024 and 2025 for a fourth consecutive month, amid a continued slowdown in Chinese consumption
- Global demand is expected to increase by 1.8 MMBbl/d or about 2% in 2024, 107 MBbl/d less than OPEC’s prior forecast
- The group revised it’s 2025 forecast lower too, now expecting demand growth to increase by 1.5 MMBbl/d, down by 103 MBbl/d from the prior forecast
China to receive lower Saudi oil supply in December on slow demand (PGJ)
- Saudi Arabia's crude oil supply to China is set to decrease in December due to lower demand, marking the lowest supply since July
- Saudi Aramco cut December official selling prices for all crude grades to Asia
- Saudi crude exports to China dropped 10.8% in the first nine months compared to last year

Natural gas ripped higher yesterday by 26c to $2.920 for the December contract as weather models turned less mild and supply was lower
- Some of those gains were pared Tuesday morning as prompt month traded lower by a few cents in early trading
- Yesterday’s price move was likely boosted by short-covering as traders had to reposition due to a shift in weather
Despite Monday’s rally, the natural gas fundamental setup looks tough
- Natural gas stocks are expected to peak 4.02 Tcf – higher than last year entering winter
- Supply is down, but there are likely multiple Bcfs shut-ins due to low prices – especially in Appalachia
- Long-range weather models are mild – low validity here
- New demand growth only coming from the startup of two LNG facilities that may not account for enough material volume by winter’s end
- Weather can really help prices if we have a “normal” average winter, but a mild one will see cash prices very low for much of the winter