Daily Energy Market Update September 5,2025

Liquidity’s Daily Market Overview

Energies are lower with news wires touting the fact that crude oil is set for a weekly loss, pressured by supply concerns as OPEC+ is seen possibly hiking output at its meeting Sunday. Also weighing on prices is the crude oil build seen in the DOE data.

The supply concerns stem from the expectations that OPEC+ will raise production at their meeting this Sunday, seeking to regain market share. The group would be starting to unwind a second layer of output cuts of about 1.65 MMBPD, or 1.6% of world demand, more than a year ahead of schedule. One analyst group suggests that OPEC+ may raise output by 550 MBPD, similar to the pace of unwinding the 2.2 MMBPD of cuts since Q2. The analysts add :""A reason Saudi Arabia could push to unwind the remaining voluntary production cut is that some OPEC+ countries may not be able to add incremental barrels," Countries with quotas under the OPEC+ accord produced 380 MBPD below their target in July, according to the Platts OPEC+ survey by S&P Global Commodity Insights. The group's spare capacity is concentrated in Saudi Arabia, the UAE and Kuwait. OPEC+ may be looking to raise output as strong seasonal demand through the Northern Hemisphere summer, as well as Chinese stock building, have propped up prices in recent weeks, while expectations that the U.S. Fed will cut interest rates could buoy the market further, as per Platts commentary.

But, Reuters points out that supply risks continue to support the market, however. U.S. President Donald Trump told European leaders on Thursday that Europe must stop buying Russian oil, a White House official said. Today, President Zelensky said that U.S. and European teams will meet within days to discuss sanctions. (Bloomberg)

Strength in the downstream sector has been a key support for prices, BMI analysts said in a report, but refining margins will likely be squeezed in coming months as global demand growth wanes and refiners ramp up maintenance. (Reuters)

All in all, the DOE data was disappointing with a crude oil build (+2.415 MMBBL) versus forecasts for a draw of near 2.0 MMBBL. This week saw net crude imports rise. Net crude imports rose this week by 434 MBPD to 2.858 MMBPD, mostly due to higher crude oil imports, which rose by 508 MBPD. Product demand slipped with distillate demand falling below that seen in the prior 2 years. On the plus side for distillates, the build in the DOE (+1.681 MMBBL) was less than seen in the API data (+3.687), although the distillate supplies built versus forecasts for a draw. The gasoline draw (-3.795), while better than forecast, was less than seen in the API data (-4.577) . Gasoline demand fell by 123 MBPD to 9.117 MMBPD, beating last year's demand of 8.938 MMBPD, but lagging 2023 demand of 9.321 MMBPD. Distillate demand fell on the week by 373 MBPD to 3.768, lagging the prior 2 years' demand by 98 and 229 MBPD. RB futures fell after the DOE's by over 1 cent, likely due to the Padd breakdown for the gasoline supplies. Padd 1/ East Coast, the delivery location for RB on the CME, saw supplies rise by 0.5 MMBBL. The gasoline draws were in Padd 3 / Gulf Coast and Padd 5 / West Coast.

A Reuters survey has OPEC having raised oil production by 360 MBPD to 27.84 MMBPD. This is versus the Bloomberg survey that had output up 400 MBPD to 28.55 MMBPD. OPEC members - Algeria, Iraq, Kuwait, Saudi Arabia and the UAE - were to raise output by 416 MBPD before the effect of compensation cuts totaling 178 MBPD for Iraq, Kuwait and the UAE. According to the survey, the actual increase by the five was 310 MBPD.(Reuters)

The Non Farm Payroll data is due out this morning at 8:30 AM. The forecast is for August to have seen 75,000 new jobs added, up slightly from July's addition of 73,000 jobs.

Energy Market Technicals

The energies are having inside trading days today versus yesterday's price ranges, possibly in a wait and see mode ahead of Sunday's OPEC+ meeting. RB and the crude oils have negative momentum basis the DC charts, while the distillates have positive momentum.

WTI spot futures see support at 62.18-62.25 and then at 61.25-61.28. Resistance lies at 64.34-64.42 and then at 65.10-65.11.

Natural Gas Market Overview

Natural Gas--NG is up 1.0 cents NG prices are up slightly in the spot futures as some late heat is seen in the South. For now the spot futures are having an inside trading day versus yesterday's price range.

The EIA storage data showed a build of 55 BCF, which was in line with news wire survey estimates. Total storage rose to 3.272 TCF. This is +173 BCF / +5.58% versus the 5 year average, but -73 BCF/-2.18% versus last year's storage level.

Natural gas delivered 46% of US electricity last week, underscoring its central place as renewables face seasonal and supply hiccups. And with the Pacific Northwest expecting only modest hydropower output in 2025, grids may have to rely even more on gas, amplifying demand even if short-term forecasts seem calm. (Finimize.com) A colleague offered the following observation: "NG is just setting its narrow trading range for September, which historically is the low production month for renewables. Throw in some early HDDs in Chicago, nuclear refueling and potentially early winter weather forecasts and we probably are trading sideways this month."

U.S. power developers are planning to sharply boost natural gas and hydropower generation capacity and are cutting back on plans to add new solar and wind farms, according to recent data on the U.S. power capacity pipeline. This is a function of the changing landscape that the Trump administration has created. The power developers have a capacity total now that is more than twice as large as what was in developer pipelines a year ago. Plans for renewable power capacity have fallen by nearly 17% from a year ago. But, some of the apparent cuts to the renewables development pipeline can be explained by the fact that some of the capacity that was previously being built is now operational. Reasons for the cuts to the renewable pipeline include the growing wait times for new power assets to get connected to local grids, and the rising costs for parts and materials - especially for wind farms. Gas capacity's share of the overall U.S. power system will remain more than twice as large as any other power source, at 44%, once construction and pre-construction work is complete. Once projects that are currently under construction and in pre-construction are complete, both wind and solar will have a roughly 14% share while coal power's share will drop to around 12%, from current 15%. (Reuters)

There is now a double top on the spot NG futures from Wednesday/Thursday at 3.131 / 3.130. After now being up for 7 sessions in a row--is it time for NG to ease back?? That may depend on if the cash price eases back below $3.00, as its strength and the production drop seen this week have supported the NG futures. One comment seen Thursday said :" The October contract has surged into technically overbought territory for the first time since June, hinting at rising momentum and a possible uptick in volatility." The DC chart shows an overbought condition. Above the double top at 3.130/3.131, resistance comes in at 3.186-3.187. Support lies at 3.011-3.014 and then at 2.960-2.964.

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