Not Happy. The Energy Report 08/29/2025

The latest strikes cast a long shadow over President Donald Trump’s ongoing efforts to broker peace, raising new questions about geopolitical risk as headlines. Traders braced for volatility even as bullish and bearish forces keep us locked in a trading range. Potentially the biggest headline that may come out of this is that at some point President Trump may have to lay down the hammer and put tougher sanctions on Russian oil even as that prospect will raise the probability of sharply higher prices for products.

President Trump has announced stricter sanctions, while India has indicated it will continue purchasing Russian oil. However, Bloomberg reports that informal communications between the US and India remain ongoing. They also report that New Delhi has no immediate plans to retaliate against President Donald Trump’s 50% tariffs on the South Asian nation, according to an official familiar with the matter. While talks on a bilateral trade deal have been postponed, the two countries continue to communicate on critical issues, including defense and foreign policy, a top official from the Ministry of Commerce and Industry said, asking not to be identified because the discussions are private.

Still Reuters is reporting that  the freight rates for Russian crude shipments from Baltic ports to India have risen in August, driven by fresh European Union sanctions and increased demand for tankers after higher loading volumes this month, trade sources said and shipping data showed. The cost of shipping Urals crude from Baltic ports such as Ust-Luga to India has climbed to about $6 million per one-way trip, up from $5.3 million to $5.5 million in July and early August.

As we head into maintenance season, crack spreads overseas have been rising, with Europe still at risk of a very cold and expensive winter if sanctions persist against Russia and oil. Meanwhile, the market also has its eye on the U.S. As we say goodbye to summer, the focus shifts to gasoline demand for the holiday weekend. Shoulder season is upon us, and the market could see a bit of demand weakness unless there are dramatic changes in the weather.

Fox Weather is warning that, “Heavy rainfall from the Desert Southwest through the Southeast is expected to persist through the Labor Day weekend, with NOAA’s Weather Prediction Center warning of the risk of excessive rainfall and isolated flooding. The precipitation, which has been impacting the region for several days, is associated with a slow-moving frontal boundary and multiple waves of atmospheric energy that have sparked showers and thunderstorms. That could impact travel demand.

An increase in the Chinese stock market suggests that Chinese demand should remain solid, and here in the U.S., with record-breaking stock prices, it appears the economy is still going strong. A big key today, of course, will be the PCE index, which is the Fed’s favorite measure of inflation. If that comes in soft, one will assume that all energy and products should get a boost.

If you thought the natural gas market was taking a summer nap, think again. Natural gas comes into one of the weakest periods of the season and the market on the charts looks like we might have a counter seasonal move but that’s going to be tough. Predictions of cold weather coming in early in and winter just around the corner, it seems to have given this market a boost.

The Energy Information Administration  reported that Henry Hub spot prices shook off last week’s lull, climbing 7 cents to $2.88 per MMBtu as traders digested shifting supply and demand. The September NYMEX contract didn’t go quietly into expiration, closing at $2.867 per MMBtu—up 12 cents from last Wednesday. October’s contract ticked up to $2.886, and the 12-month strip is now averaging $3.622, inching higher by 3 cents.

Regionally, it was a mixed bag. Natural gas spot prices dipped at most hubs, but Henry Hub bucked the trend, while SoCal Border-Ehrenberg took a $1.11 plunge. In the Northeast, prices slipped as summer demand faded: Boston’s Algonquin Citygate fell 71 cents to $1.50, and New York’s Transco Zone 6 dropped 64 cents to $1.39. Gas consumption nosedived by 11% in the region, led by a 17% slide in demand—classic late August behavior as the market recalibrates before the fall.

Consumption in the electric power sector, according to data from S&P Global Commodity Insights. Cooler temperatures in the Northeast resulted in 170 fewer cooling degree days (CDDs) this week, 96 fewer than normal for this time of year, in addition to 18 heating degree days that are not typical for this time of year. Temperatures in the New York-Central Park Area averaged 72°F this report week, resulting in 48 CDDs, 28 fewer than last week and 25 fewer than normal for this time of year.

According to the folks at S&P Global Commodity Insights, total natural gas supply across the board barely budged this week, holding steady at an average of 112.7 Bcf/d. But here’s the headline—Lower 48 dry gas production climbed to a record-breaking 107.8 Bcf/d. That’s right, we’ve never seen production this high before in the U.S. Meanwhile, net imports from Canada slipped 5.3% (0.3 Bcf/d), giving domestic supply a little more room to run.

Now, on the demand side, things cooled off—literally. S&P Global Commodity Insights says total U.S. natural gas consumption dropped 5.8% (that’s 4.4 Bcf/d lower than last week) as the East and Midwest enjoyed milder temps. Power generators felt it most, with a 10.4% drop in gas burn (down 4.7 Bcf/d). On the flip side, industrial demand ticked up 1.4% (0.3 Bcf/d), and residential/commercial use barely moved, up just 0.2%. Natural gas exports to Mexico eased by 1.3% (0.1 Bcf/d). And here’s an LNG twist—deliveries to U.S. export facilities averaged 16.4 Bcf/d, up a robust 0.9 Bcf/d from last week.

For Liquefied Natural Gas (LNG) pipeline receipts, S&P Global Commodity Insights indicates that average gas deliveries to U.S. LNG export terminals increased by 0.9 Bcf/d, reaching a total of 16.4 Bcf/d. South Louisiana led this growth with a notable 7.6% increase (up 0.8 Bcf/d), while South Texas registered a 5.3% rise (0.2 Bcf/d). Deliveries outside the Gulf Coast remained stable at 1.1 Bcf/d.

Regarding vessel activity, Bloomberg Finance L.P. reports that twenty-eight LNG vessels, collectively carrying 106 Bcf, departed from U.S. ports between August 21 and August 27.

Additionally, the latest rig count is now available. According to Baker Hughes, for the week ending Tuesday, August 19, the natural gas rig count was unchanged from the previous week at 122 rigs, while oil-directed rigs declined by one to 411 rigs. The Williston basin also saw a reduction of one rig. Including 5 miscellaneous rigs, the total rig count stands at 538, which represents a decrease of 47 rigs compared to the same period last year.

Net injections into storage totaled 18 Bcf for the week ending August 22, contrasting with the five-year (2020–24) average net injections of 38 Bcf and last year’s injection of 35 Bcf during the corresponding week. Working natural gas stocks amounted to 3,217 Bcf, which is 154 Bcf (5%) above the five-year average and 112 Bcf (3%) below last year’s level for the same period. Estimates of the weekly net change to working natural gas storage were provided by The Desk survey of natural gas analysts.

Stay tuned—volatility is lurking just beneath the surface, and shoulder season always brings surprises.

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