Oil, fundamental analysis
With the Trump-Putin Alaska Summit resulting in no progress on the Russia/Ukraine war, it’s now a distant memory for oil markets.
Traders have turned to the OPEC+ output increase coming Monday, another weekly draw in crude inventories and the imposition of additional tariffs on India for continuing to purchase Russian oil. WTI’s high for the week was Monday’s $65.10/bbl while the low was Wednesday’s $62.95. Brent crude tracked a similar pattern with a high of $69.10/bbl Monday with a subsequent low of $66.90 Wednesday.
Both grades look to eek out small weekly gains. The Brent/WTI spread has tightened to ($3.85). Friday’s Hi/Low range for WTI was a mere $0.65 on below-average trading volume indicating uncertainty about price direction. Trading can be light ahead of a holiday weekend.
The announced 500,000 b/d output increase from OPEC+ kicks-in on Monday. While decidedly 'bearish,' the market has already priced it in and data from past months indicates that the group has thus far failed to fully meet the raised quotas. The group will meet again Sept. 7.
The Trump administration went through with plans to increase tariffs on imports from India by an additional 25% in an effort to force the country to halt purchases of Russian Urals. India’s growing economy has needed any and all forms of energy so it will be interesting to see their response. Should they agree to do so, a bullish tone in the markets will emerge as India seeks other suppliers. Meanwhile, German Chancellor Merz was reported as having said that a Putin-Zelensky meeting was unlikely, dimming prospects for peace talks let alone, a ceasefire as hostilities from both sides continue.
Last week’s Federal Reserve meeting in Wyoming provided some economic optimism as Fed Chairman Powell seems open to a quarter point interest rate reduction next month based upon the weak labor numbers. Such a move would be positive for the perception of future energy demand, but we will have to wait and see.
In contrast, the Energy Information Administration (EiA) in its latest STEO is predicting an overall surplus in global crude and refined products for this year and next. Supply will average 105 million b/d this year and 106 million b/d next year while consumption will be 103.7 million b/d and 104.9 million b/d, respectively.
The EIA Petroleum Status Report indicated that commercial crude oil inventories for last week decreased for the second consecutive week while production held at 13.4 million b/d vs. 13.3 million bld.
The Personal Consumption Index (PCE), the Federal Reserve’s preferred measure of inflation for July came in at +0.2% vs. June and +2.6% year-on-year. Both were in line with expectations and are not expected to change the Central Bank’s thoughts on a rate decrease next month. Personal Income was +0.4% over June while Personal Spending was +0.5%. Despite the optimism regarding an interest rate cut, the inflationary data is weighing on the market. All three major US stock indexes are lower week-on-week on lighter pre-holiday trading volumes. The USD is flat on the week which is neither supportive nor negative for crude.
Oil, technical analysis
October 2025 WTI NYMEX futures moved into the prompt month this week as September settled. Prices are trading above the 8-, 13- and 20-day Moving Averages. Volume is below the recent average at 130,000. The Relative Strength Indicator (RSI), a momentum indicator, is in neutral territory at 51.
Resistance is now pegged at $63.85 (8-day MA) while near-term critical Support is $63.25 (13-day MA). The very small price range Friday sets the stage for a breakout to either side. Such a move will do so with good momentum given the market indecision currently.
Looking ahead
Early statements from India indicate they will not bow to the new Trump tariffs and believe they have the right to purchase oil from anyone. Traders will have to monitor that situation to see how much resilience India has.
As we enter September, two major fundamental factors will emerge. First, Labor Day in the US signals the end of the summer driving season. Secondly, the OPEC+ group output will have to be closely watched to see if they can actually deliver that large of an increase. Further, all markets will be awaiting a firm announcement by the Fed of a rate decrease next month.
The National Hurricane Center is watching a new tropical system emerging from West Africa. Invest 99L is expected to develop further by mid-week next week. We are entering the peak period of the hurricane season which has been quiet for the most part so far.
Natural gas, fundamental analysis
Despite some support this week, October Henry Hub NYMEX Natural Gas Futures have been in a steady 2-month downtrend. A below-forecasted storage injection helped boost prices this week but this summer has not experienced the more prolonged heat spells of the recent past. And production continues to grow.
The week’s High was $2.99/MMbtu on Thursday with the week’s Low of $2.74 on Monday. Supply last week was +0.1 bcfd to 112.7 bcfd vs. 112.6 bcfd the prior week. Demand was -2.7 bcfd to 102.5 bcfd vs. 106.2 bcfd the week prior, with the biggest decrease in the Power sector.
Exports to Mexico were 7.3 bcfd vs. 7.4 the prior week. LNG exports were back up to 16.4 bcf vs. 15.5 bcfd the prior week.
Dutch TTF prices have fallen to $9.35/MMbtu equivalent while Asia’s JKM was quoted at $11.22/MMbtu. The EIA’s Weekly Natural Gas Storage Report indicated an injection of 18 bcf, below the forecasted +28 bcf and the 5-year average of +38 Bcf. Total gas in storage is now 3.217 tcf, dipping to 3.4% below last year and to 5.0% above the 5-year average.
Theoretically, there are just 8 weeks left in the injection season. To achieve a season-ending volume of 3.9 tcf, injections would have to average 85 bcf per week and +97 bcf to hit 4.0 tcf.
Natural gas, technical analysis
October 2025 NYMEX Henry Hub Natural Gas futures are above the 8- & 13-day Moving Averages and around the 20-day MA. Volume was 106,00 and lower than the recent average. The RSI is neutral at 46. Support is pegged at $2.90 with critical Resistance at $3.00 as the next key area if prices are to continue higher.
Looking ahead
The EIA is forecasting a 1% increase in natural gas demand in the US for this year, averaging 91.4 bcfd. January set a new record high of 126.8 bcfd, +5% over January 2024.
The NOAA 8-14 day forecast indicates a large area of the country will experience below-normal temperatures for the first week in September which could lead to larger storage injections. The Tropics bear watching for natural gas as well. As with oil, an interest rate decrease bodes well for future energy demand of all kinds.
About the Author
Tom Seng
Dr. Tom Seng is an Assistant Professor of Professional Practice in Energy at the Ralph Lowe Energy Institute, Neeley School of Business, Texas Christian University, in Fort Worth, Tex.