API Report Slows Upward Momentum

CRUDE OIL

September Crude Oil held yesterday’s gains for the most part overnight despite a bearish API report, but that report did slow the upward momentum. There were reports of another Houthi attack on a ship in the Red Sea, actually a second attack on the same cargo ship first attacked on Monday, and this has put Mideast supply concerns back on the table, to a degree. In their short-term energy outlook, EIA forecast US crude oil production 13.37 million barrels per day in 2025, which was down from a forecast of 13.42 million forecast in June, citing uncertainty over the tariffs. This is still a record high and is up from 13.21 mbpd in 2024. They put 2026 production at 13.37 mbpd as well. This is up from 13.21 mbpd in 2024. For the US supply report today, the Reuters poll has an average trade expectation for US crude oil stocks -2.1 million barrels last week, with distillates expected -300,000 and gasoline -1.5 million. Refinery runs are expected to be unchanged at 94.9%. Market sources told Reuters that API crude stocks were +7.13 million barrels, with distillates -830,000 and gasoline -2.18 million.

NATURAL GAS

The weather forecast for the US has turned cooler than yesterday, with the 6-10 day forecast showing an area of below normal temperatures across the Plains from north to south, and the 8-14 day showing near normal temps covering the Plains and the western half of the Midwest, all which should limit cooling demand next week. For the EIA gas storage report tomorrow, the early Reuters poll has a range of expectations calling for US storage to show a net build of 48 to 61 bcf last week. The five-year average change for the week is +49 bcf (range +16 to +65). In their short-term energy outlook, EIA forecast US dry gas production to increase from 103.2 billion cubic feet per day in 2024 to 105.9 bcfd in 2025 and then fall back to 105.4 bcfd in 2026.

PRODUCTS

The API report came in close to expectations for US gasoline and distillate stocks, leaving the market looking to today’s EIA report for confirmation. One question will be whether implied gasoline demand will show an improvement over last week’s 8.64 million barrels per day. A year ago this week, implied demand was 9.398 million, and the five-year average is 9.005 million.

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