Daily Energy Market Update August 4,2025

Liquidity’s Daily Market Overview

Energies are lower on the back of the back of the (expected) decision by OPEC+ to raise output. Prices had rallied overnight as the threat of U.S. sanctions on Russian crude oil buyers has traders "wary".

OPEC+, agreed on Sunday to raise oil production by 547 MBPD for September, thus unwinding all of their voluntary 2.2 MMBPD cuts. Output was raised as they see a healthy economy and low stockpiles. Analysts at Goldman Sachs expect that the actual increase in supply from the eight OPEC+ countries that have raised output since March will be 1.7 MMBPD, because other members of the group have cut output after previously overproducing. Yet, Goldman adds that OPEC+ won't release more oil after September, citing rising U.S. oil output, slowing global economic growth and a build up in oil stocks after the end of the driving season in September. (Reuters)

At least two vessels loaded with Russian oil bound for refiners in India have diverted to other destinations following new U.S. sanctions, trade sources said on Friday and LSEG trade flows showed. This puts about 1.7 MMBPD of crude supply at risk if Indian refiners stop buying Russian oil, ING analysts said in a note. However, two Indian government sources told Reuters on Saturday the country will keep purchasing oil from Russia despite Trump's threats. The NY Times cited one official saying that the government had “not given any direction to oil companies” to cut back imports from Russia. Reuters had earlier reported that Indian state refiners stopped buying Russian oil in the past week as discounts narrowed in July. India’s Oil Corp (IOC), the country’s top refiner, has bought 7 MMBBL of September-arrival crude from the US, Canada and the Middle East via a tender, according to Reuters trade sources. IOC’s large spot purchase comes after the arbitrage window for US crude to Asia opened and as India state refiners paused buying of Russian crude, narrowing discounts.

As for China, they are said to be pushing back against U.S. demands to stop buying Russian and Iranian oil. China will always ensure its energy supply in ways that serve our national interests,” China's Foreign Ministry posted on X last week. Continuing to buy oil from Russia preserves Xi's “strategic solidarity” with Russian President Vladimir Putin and significantly reduces the economic costs for China, one China analyst said.  In April, Chinese imports of Russian oil rose 20% over the previous month to more than 1.3 MMBPD. With regard to China's buying of Iranian oil, a 2024 report by the U.S. EIA estimates that roughly 80% to 90% of the oil exported by Iran went to China. The Chinese economy benefits from the more than 1 MMBBL of Iranian oil it imports per day. (AP)

Friday's Baker Hughes oil rig count report showed a decline of 5 units. The total oil rig count of 410 is the lowest since October 2021. Baker Hughes said this week’s decline puts the total rig count down 46 rigs, or 7.8% below this time last year.  (Reuters)

The weak jobs data seen Friday weighed on equities and hence on energy prices. Friday's Non Farm Payroll data showed 73,000 new jobs were added in July. This was less than estimates calling for 100,000 to 105,000 new jobs to be added. Also very notable in the data released Friday, were revisions to May and June's data that reduced the prior figures by 258,000 jobs.

Money managers added net length in the energies during the week ended Tuesday July 29. Brent length rose by 33,959 contracts on a mix of short covering and longs added. WTI length combined on ICE/CME in futures/options rose by 5,127 contracts. RB net length rose by 6,141 contracts, while ULSD length rose by 2,261 contracts. The ULSD length is said to be the highest in 4 years, as per Market News commentary. ICE gasoil length rose by 2,464 lots to 100,644 lots as of last Tuesday, the largest position held since March 2022, as per ING reporting.

Goldman Sachs on Sunday reiterated its oil price forecast with Brent averaging $64 per barrel in the fourth quarter of 2025 and $56 in 2026, but expects an increasing range of risks to its baseline estimates from recent developments. Upside risk is seen from possible sanctions on Russian and Iranian oil supplies, while downside risk stems from the increase in U.S. tariff rates, threats of additional secondary tariffs and weak U.S. economic activity data. (Reuters)

Energy Market Technicals

Natural Gas Market Overview

Natural Gas--NG is down 7.2 cents
NG spot futures are lower, but the chart shows a sideways pattern over the past 8 sessions. A lack of conviction in either direction for prices may have set in for the NG market. Strong feedgas demand of late and looming heat for the middle of August are offset by continued strong production.

Friday's Baker Hughes report showed that the gas rigs count rose by two to 124, their highest since August 2023. This count reaffirms the robust NG production seen of late. U.S. domestic natural gas production was up to over 109 BCF/d again at the weekend compared to the 30-day average of 108.4 BCF/d and the record high of 109.9 BCF/d on July 28, according to Bloomberg data.

On Saturday, LNG feedgas demand rose to 16.4 BCF/d, the highest since July 15 & up +3.3 BCF/d vs last year. (Celsius Energy)

On Friday, forecaster Atmospheric G2 said that forecasts shifted warmer for the Midwest, Southwest, and Texas for August 6-10, and forecasts turned hotter across much of the eastern half of the US for August 11-15. (Barchart)

NG futures volume on the CME on Friday was low at under 300,000 contracts, which we take as suggesting a lack of conviction by either bears or bulls on market direction. This sentiment is echoed by one analyst's comment: " After a vicious sell-off the previous week, the natural gas sector found the bears at least temporarily exhausted but still without a solid bullish catalyst to drive a reversal, leading to the period of sideways trading."

In the week ended Tuesday July 29, money managers mostly added longs such that their net shorts dropped by 21,115 contracts to a total of 13,005 contracts. This is the lowest net short total since money managers were net long in the week of April 17.

Strong nuclear output and coal-fired power generation have helped meet power load in Asia amid heatwaves this summer. Since the beginning of the year, Asian LNG imports have fallen by 6% to 156.35 million tons (Mt), when compared to the same period in 2024, according to Kpler. Chinese demand has been sluggish, to some degree held back by the high prices for global LNG compared to the domestic price seen in China. (NGI) But, Asian end-users are expected to ramp up summer LNG procurement activities to meet rising cooling demand as Northeast Asia grapples with unprecedented heat waves. Demand from Japan has begun to emerge, as high temperatures have fuelled increased demand for prompt deliveries. Other Asian end-users were on the sidelines amid higher prices.  (LNG Industry.com) Asian spot LNG prices inched up after two weeks of declines as geopolitical risk factors including US threats of sanctions Russian energy lent support. Asian LNG imports are expected to rise in August driven by power generation demand in Japan and South Korea: Bloomberg.

Technically, NG spot futures are currently holding on to positive momentum, despite the sideways action of late. Support is seen at last week's low of 2.972 and then not until 2.858-2.859. Resistance comes in at 3.140-3.145 and then at 3.186-3.187.

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This article and its contents are provided for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any commodity, futures contract, option contract, or other transaction. Although any statements of fact have been obtained from and are based on sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed.

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