Daily Energy Market Update-August 24, 2026 Tim's Market Views

Interim Analyst:

· With regular analyst Mark Schaefer out of the office, interim market commentary will be provided by Tim Evans, founder of Evans on Energy.  Tim has experience writing daily market commentary on crude oil, heating oil, gasoline, and US natural gas since 1995, including 17 years as the Energy Futures Analyst at Citigroup.

The Petroleum Markets

Geopolitical risk factors were little changed through the weekend, with Iran warning its trading partners not to cooperate with US threatened sanctions to increase pressure.  The Iranian response adds another barrier to the resumption of peace negotiations.

Given the steady ongoing geopolitical risk to supply, the initial price weakness in Monday’s session suggests a shift to at least short-term consolidation as a correction to a short-term overbought condition, rather than a reaction to bearish fundamental news.

Crude Oil

In addition to the geopolitical backdrop, crude oil has also drawn support from declining inventories that confirm the resulting overall supply/demand deficit.  With US commercial crude oil inventories at their five-year average as of August 14, the tightness is more evident in the reliance on the 122 mmbls transferred out out of the Strategic Petroleum Reserve since March.

The flows of US commercial crude stocks have been volatile week-to-week with a surprise increase of 17.4 mmbls for the week ended August 7.  But since that bearish surprise we’ve seen a significant shift to a far smaller 4.4 mmbls gain in the week ended August 14.  This week-to-week tightening might be followed by a draw of perhaps 4-6 mmbls in Wednesday’s report for the week ended August 21.

Last week’s rally in outright crude oil prices was supporte by a widening backwardation in calendar spreads with October Brent and WTI crude oil gaining more than the January contracts fro example.  October Brent only has a week left to trade, but a brief consolidation followed by new highs would have it on track to challenge the $98-102 highs from mid July as established resistance.

Heating Oil (ULSD)

Heating oil prices remain well supported by international refinery outages, including the Ukrainian drone attacks on Russian refineries that have put pressure on US supplies.  These international outages have pressured US supplies, with US total distillate inventories declining 1.5 mmbls in the week ended August 14 to a new low of 13% below their five-year average.

While inventories are extremely tight and may continue to trend higher, heating oil has also already achieved a record valuation.  October heating oil futures have already settled for as much as $97.50 per barrel over WTI crude oil on August 18.  Declining upward momentum suggests potential for a technical correction that would test whether these extraordinary valuations are sustainable.

RBOB Gasoline

The US gasoline market has been less affected by the international refinery outages than the distillate side, and the modest 0.7 mmbls build in US total gasoline inventories for the week ended August 14 trimmed the year-on-five-year average stock deficit to 5%.

The EPA has waived requirements for summer specification fuels two weeks early in selected markets.  While this may create some surprise winners and losers for those short or long the summer blend, it’s not clear it will have much of an impact over the total barrels of gasoline supplied or demanded.

October gasoline continues to trade at a crack spread premium over WTI crude oil close to $40 per barrel, a valuation close to where it was a month ago.  This stable relative balance seemingly also incorporates seasonal expectations for demand to step lower after Labor Day, with an offsetting reduction in supply due to scheduled refinery maintenance.

US Natural Gas

Nearby September natural gas futures are starting the week near the middle of the range of the past four weeks.  With US working gas in storage 0.9% lower than a year ago, the price is holding a modest premium over the $2.622 low trade from last August.  The market is also trading a step above the $2.495 low reached last March.

The forward market and winter strip remains at a premium to the nearby futures, with associated risk of a further decline.  December futures broke below the $3.50 level last week and are grinding lower near the bottom of the established declining price channel.

The near-term forecast for intense heat across the southern US may support the front of the curve more than the back.

About:

Evans on Energy founder Tim Evans has been writing daily market commentary on crude oil, heating oil, gasoline, and US natural gas since 1995, including 17 years as the Energy Futures Analyst at Citigroup.  The report brings a fundamental perspective informed by a Penn State degree in Mineral Economics that puts recent developments within their larger historical context.