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First Look - OPEC cuts demand forecast for a fifth month

Oil is trading higher despite a demand forecast revision by OPEC
- US inflation data was in line with forecasts and has raised expectations of a Federal Reserve interest rate cut next week
- The EIA said in its short-term outlook yesterday that they expect global crude markets to be in a slight deficit in 2025, in a reversal of their prior outlook
- The API estimates that US crude inventories rose by 500 MBbls ahead of the official data release this morning
OPEC cuts forecast (BBG)
- For a fifth consecutive month, OPEC has lowered its forecast for global crude demand for 2024 and 2025
- This is the steepest revision so far, with the group lowering its estimate for 2024 demand by 210 MBbl/d
- OPEC said the change is based on recently received bearish data
- Despite the downward revisions, OPEC retains a higher estimate for demand than some other forecasters

January gas was trading 12c higher to $3.28 on Wednesday morning (8:07 CT) amid an overall cooler shift in the two-week forecast window
- The Lower 48 gained 5.2 HDDs (CWG) in the latest weather model runs, where most of the cooler temp changes landing at the end of the forecast (day 11-15)
- US gas production was down to 103.2 Bcf/d from 104 Bcf/d two days ago. The Permian accounted for most of the drop, down about 700 Bcf/d to 20.3 Bcf/d, according to modeled flows from S&P Global
Deloitte projects major data center buildout, but not without challenges (S&P)
- Projected to quadruple electricity demand by 2030, driven by generative AI, machine learning, and cryptocurrency mining
- Transformer procurement lead times increased from 50 weeks (2021) to 120 weeks (2024)
- Nuclear options being explored
- Potential overestimations in demand due to data center co-location and energy efficiency improvements
- To support the data center buildout, regulatory steps need to be taken for all forms of energy to be used to support such a proposed increase in demand