Labor Day Gas Surge. The Energy Report 08/28/2025

It’s back to school and gasoline demand surges as people take advantage of the last big holiday of the season, it will be Labor Day get the grills going and get to your destination point because it appears that based on demand numbers last week that we’re going to see a surge of holiday activity.   Goodbye Summer Blends, hello winter.  AAA has the current gas price at $3. 201 up  from $3137 from a week ago partly due to issues at the  BP Whiting refinery but are cheaper than the $3.361 from a year ago.

Oil prices rallied after the Energy Information Administration (EIA) reported robust gasoline demand, at 9.240 million barrels a day  giving the market a needed boost.   Gasoline numbers have been all over the weekly numbers bode well for a big crescendo to the summer driving season that according to EIA hasn’t been blockbuster.

Let’s break down the numbers because they’re telling a story of demand numbers that have been swinging wildly week to week. Last week they had gasoline at 8.842 million barrels a day so we increased 398,000 barrels a day.

 Gasoline demand on the four-week moving average is averaging 9 million barrels a day, which is actually down 1.1% compared to last year.

Yet total products demand averaged a solid 21.2 million barrels a day over the past four weeks, up 2.5% from a year ago, as a sign demand is still marching forward, despite all the market headwinds.

Distillates are still a concern as distillate fuel inventories decreased by 1.8 million barrels last week and are about 15% below the five-year average for this time of year and supplied volumes are up a robust 7.7% year-over-year, coming in at 3.9 million barrels a day.

  This is why we saw that ExxonMobil announced that its Baytown facility will pivot towards increased diesel production by 2028.

This comes as Quantum Energy Intelligence reports that Naphtha cracks have soared to a three-month high just as we head into refinery maintenance season. Jet fuel demand is also lifting off, up 1.7% versus the same period in 2024.

The rest of the supply situation?  EIA says that U.S. commercial crude oil inventories (not counting the Strategic Petroleum Reserve) dropped by 2.4 million barrels, landing at 418.3 million. That’s actually 6% below the five-year average.

Gasoline inventories also took a dip, down 1.2 million barrels, which lines up with the usual five-year average. Interestingly, finished gasoline supplies went up, but the blending components fell.

And if we look at the big picture, total commercial petroleum inventories were down by 4.4 million barrels last week.

Yet despite this data also stays locked in a tight trading range it’s bullish forces and bearish forces keep the market very stable. Goldman Sachs came out with a bearis call  noted that growing OECD oil stockpiles remain a major drag on prices.  They see Brent in the 50’s

In geopolitical news, there are reports of explosions on a Moscow products pipeline and Ukraine is claiming that it hit two Russian oil refineries overnight.

Bloomberg reported that they said they hit the Kuibyshev refinery and the Afipsky Refinery ,

 Ukrinform reported that a main pipeline supplying oil products to Moscow exploded in Russia’s Ryazan region. Sources in the Defense Intelligence of Ukraine reported this to Ukrinform. On August 26, a powerful explosion occurred on the Ryazan–Moscow oil pipeline, one of the main supply routes for petroleum products to the Russian capital.

Interfax is reporting that Russian oil supply to Hungary and Slovakia has resumed through the Druzhba pipeline.

Of course, yesterday the Wall Street Journal reported that ExxonMobil was in secret talks with Russia to resume working in the oil fields assuming that the ceasefire can be and between Russia and Ukraine.

You know, despite all these market-moving headlines, prices just refuse to budge—traders are glued to that narrow range, almost as if they’re waiting for a spark to set things in motion. It’s the classic push and pull—bulls and bears in a stalemate while everyone waits for the next shoe to drop. Natural gas futures on the other hand we’ve seen the shoes drop for some time but are showing signs of a bottom. Demand expectations for natural gas continue to grow its natural gas will be a major factor in powering much of the artificial intelligence revolution.

We did get a little bit of a pop as September as seeing some short covering as October takes up the mantle of the front contract and there are some signs that natural gas production may tail off. Today we get the natural gas weekly supply report and we should see an injection of about 27 BCF.

We also must keep an eye on the weather.  Fox Weather reports that rounds of torrential rain and thunderstorms from the Plains to the Deep South are leading to a potentially dangerous setup that could produce life-threatening flash flooding on Thursday. It’s an active weather pattern that the FOX Forecast Center said would remain in place across the region through the rest of the workweek and into the Labor Day holiday weekend.

Download the Fox Weather App! For financial updates, tune in to the Fox Business Network. And if you’re interested in market moves or want to open an account, reach out for Phil Flynn Trade Levels at 888-935-6487 or email pflynn@pricegroup.com.