Daily Energy Market Update September 3, 2025

Liquidity’s Daily Market Overview

Energy futures are lower as Reuters reports that OPEC+ is considering raising output at their meeting this coming Sunday.

“Headlines on drawing down that tranche will spook the market, but in reality we expect to see less barrels actually returning than the headlines,” said one analyst. "That’s because of “compensation requirements for overproduction from some, and capacity constraints form others.”, they added.

Saudi Aramco and Iraq's state oil company SOMO have stopped selling crude oil to India's Nayara Energy in the aftermath of sanctions imposed in July by the European Union on the Russian-backed refiner. Nayara is majority-owned by Russian entities.  Nayara typically received around 2 MMBBL of Iraqi crude and 1 MMBBL of Saudi crude each month. Thus, the refiner sourced its crude imports in August exclusively from Russia. The private company is operating its 400 MBPD refinery at Vadinar in western India at about 70-80% capacity due to difficulties in selling its products resulting from the sanctions, sources have said. Nayara has 8% of India total refining capacity of 5.2 MMBPD. (Reuters)

Shell announced Tuesday a turnaround at its 404 MBPD Pernis refinery near Rotterdam, Holland, which is expected to last around 2 1/2 months. The Pernis refinery is Europe's largest.  This has helped keep ULSD and Gasoil values elevated versus crude oil and gasoline. Additional support for distillates may extend into the autumn if the Federal Reserve cuts interest rates this month, supporting industrial activity, according to Bloomberg sources, adding to seasonal bullish factors such as the harvest and winter.

The east-west diesel arbitrage reached its widest point in five weeks as European diesel prices strengthened following news that Shell's Pernis refinery was entering turnaround, while Asian values remained pressured by regional oversupply. Additionally supporting the European diesel market is the disruption to Russian refinery operations due to Ukrainian attacks. The arb has widened to $41.95 /metric ton for October product, according to Quantum Commodity.

Russia’s crude processing runs fell to 5.09 MMBPD through the first 27 days of August, the lowest monthly average since May 2022, as Ukraine continued to attack refineries on an almost daily basis, Bloomberg reports.

The UK Energy Institute recently postulated that petrochemicals manufactured from light ends are replacing transportation fuels as the primary driver of oil consumption.

Adding to the recent geopolitical tension, Yemen's Houthis have claimed responsibility for an attack on a Liberia-flagged oil tanker reported off Saudi Arabia's Red Sea coast on August 31st. (Quantum Commodities)

Open interest on the CME for the WTI futures saw an increase of nearly 35,000 contracts in the 2 day session that settled Tuesday. We see this as new length mostly in the November through February strip and in the June 2026 and March 2027 contracts.

The weekly API statistics will be released today and the DOE report will be issued Thursday at noon due to the Labor day holiday this week. Early estimates from a Reuters survey are calling for crude oil inventories to fall by 3.4 MMBBL, distillates by 0.3 MMBBL and gasoline by 1.0 MMBBL. Refinery runs are seen falling by 0.6%.

Energy Market Technicals

ULSD momentum has turned positive on the DC chart with the strong up move seen yesterday and today. RB momentum remains negative on the DC chart. WTI momentum basis the DC chart is trying to stay positive.

WTI is having an inside trading day at present versus the 2 day session's large price range. Support is seen at 62.17-62.25 and resistance lies at yesterday's high at 65.98-66.03.

Natural Gas Market Overview

Natural Gas--NG is up 8.7 cents
NG futures are higher today after eking out a small gain in the 2 day session that settled Tuesday. The stronger LNG demand and weaker production outpaced the weak weather demand that exists at current with no real overwhelming heating or cooling demand nationally. One unconfirmed report we have heard is of a 3.5 BCF/d drop in production overnight. The production drop is being attributed to some degree to pipeline maintenance.

Under pressure from stout production and fading cooling demand, Appalachian natural gas spot prices have been cut in half since mid-July. With the shoulder season looming, analysts are watching for signs of producer restraint. (NGI)

Lower 48 natural gas demand is estimated 0.665 BCF/d higher today at 74.03 BCF/d after falling to the lowest since mid-June at 67.4 BC/d on Aug. 31, Bloomberg shows. Today's demand compares to the previous five-year average of about 67.8 BCF/d. 

Tuesday's early pullback in futures prices was described by NGI as "the start of meteorological autumn is bringing back the bears who had gone into hibernation ahead of the holiday weekend."

The strength of LNG exports was emphasized in the news that August saw a record level, as plants exited planned maintenance programs and Venture Global’s Plaquemines facility continued to increase output, preliminary data from financial firm LSEG showed. August exports totaled 9.33 million metric tons, beating the previous monthly record set in April of 9.25 million tons and higher than the 9.1 million tons exported in July, according to LSEG data.

On Tuesday, the next day Henry Hub cash gas was quoted 2.700/2.770 in the early AM. This was down from last Thursday's quote of 2.910-2.935. But, October futures were barely changed
between the 2 quotes. Last Thursday the October futures were trading 2.930 against the cash, while on Tuesday the October futures were printing near 2.920 against the more than 15 cent weaker cash.

We saw 2 trades in NG options on the CME Tuesday of note. The November $4.50 call was bought for a cost of 2.4 cents versus selling of delta November futures at $3.27. And we saw a calendar spread option (CSO) in the October November spread. The -30 cent put was bought versus selling of the -50 cent put for a cost of 5.6 and 5.8 cents. The October November spread settled -32.6 cents Tuesday on the CME.

Technically NG futures have positive momentum with the spot futures today rising to the best level seen since August 8th. Resistance at 3.095-3.098 has been tested today with a high of 3.106. Next resistance above is seen at 3.145-3.148. Support lies at the overnight low at 2.960-2.964 and then at the key support area at 2.850-2.858. 

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Disclaimer

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.

Commodity trading involves risks, and you should fully understand those risks prior to trading. Liquidity Energy LLC and its affiliates assume no liability for the use of any information contained herein. Neither the information nor any opinion expressed shall be construed as an offer to buy or sell any futures or options on futures contracts. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Any opinions expressed herein are subject to change without notice, are that of the individual, and not necessarily the opinion of Liquidity Energy LLC