Circus Act. The Energy Report 10/01/2025

It’s time for the government shutdown circus. Stock markets dipped on the report of the government shutdown, as oil did, as we once again head into a government circus that has been played out time and time again. This time, it’s the democrats who wanted to force a shutdown by trying to protect Medicare and Medicaid for illegal aliens, and at the same time, that’s offset by the fact that President Trump secured a deal to reduce the cost of prescription drugs for many Americans.

For oil traders, they will not have to worry about not getting their Energy Information Administration report today because the agency put out a report stating that they will be able to operate for a period of time during the lapse in appropriation. So, until further notice, the EIA government website will continue to be updated, and publications will continue to be released according to established schedules. The EIA will also continue collecting energy data from survey respondents as scheduled, so make sure you submit your numbers, or you could get fined.

And speaking of the Energy Information Administration report, it might be bullish today, especially if you look at yesterday’s American Petroleum Institute (API) report, which seemed to suggest yet another big drawdown in crude oil supplies—a blow to the mantra of a so-called oil glut.

I mean, it’s hard to suggest that we’re going to have an oil glut if weekly supplies fell by a whopping 3.674 million barrels last week. Of course, building products is one of the reasons why the market didn’t skyrocket as the quest to build up diesel supply succeeded with an increase of 3.003 million barrels last week and an increase in gasoline inventories of 1.3 million barrels.

The OPEC cartel also dismisses talk of an oil glut, and they are having a lot of trouble with unnamed sources either leaking information about OPEC discussions or fabricating stories to move the market and profit. OPEC came out with a press release stating that the OPEC secretary firmly rejects media reports alleging that the group of eight countries is planning to increase oil production by 500,000 barrels a day. OPEC calls those claims inaccurate and misleading.

Of course, the unnamed sources have actually been close to the truth as they were last month when they correctly predicted that OPEC would raise production. However, I think that OPEC is getting very upset that there has been a lot of misreporting surrounding OPEC policies, and there’s a belief by OPEC that they are doing it to manipulate the market. I, for one, am shocked and appalled.

One OPEC country is saying that they are going to raise oil production on record. Iraq’s Oil Minister Hayyan Abdul Ghani told Rudaw that Iraq aims to raise daily oil production from 4.4 to 5.5 million barrels by the end of 2025, with 28 American companies currently active in the sector.

No Strike. Bloomberg News reports that Nigeria’s main oil union will end its strike after Dangote agreed to reassign over 800 laid-off workers without loss of pay. The union, Pegasean, had threatened to halt supplies to the Dangote refinery over these dismissals, which were linked to alleged sabotage. Dangote will transfer the affected staff to other companies.

Now, it is possible that a prolonged government shutdown could have some negative impact on energy demand. Of course, the military, which is one of the biggest consumers of energy, crude oil, and gasoline in the world, will continue to consume, but other government agencies may have to cut back in the coming weeks. But if you look at it from a bird’s-eye view, because oil is a global market and we’re seeing better-than-expected demand in China, global inventories that are tight, and continuing geopolitical risks, the supply side is not headed towards a glut, and we have a market that at the very best is in balance or is headed to a supply deficit in the coming months. Call phil Flynn for further discussion 888-264-5665.

Natural gas continues to get a bid as it edges higher, making the counter-seasonal move as demand expectations continue to rise. The AGA reported that affordability and reliability took the lead at the American Gas Association’s Winter Heating Outlook on Tuesday as the surge in natural gas demand is met with record natural gas production and a 16% increase in technically recoverable domestic natural gas resources.

While a continuation of last year’s “La Niña” weather pattern signals a colder than average winter season in the lower-48 states, natural gas bills are projected to be 8% lower than the higher prices of several years ago. “Natural gas continues to be America’s strategic advantage for affordable, reliable energy heading into the 2025-2026 winter heating season,” said AGA Vice President of Energy Markets, Analysis and Standards Richard Meyer. “Demand for natural gas has surged, and increased production, energy efficiency gains, and robust domestic storage have allowed the industry to keep pace, setting the stage for continued affordability and reliability for American consumers.”

“A colder than average winter means customers may consume more natural gas this year to heat their homes, but prices remain 10% lower than they were a few years ago. Natural gas utilities are part of the communities they serve and work hard every day to put customers first, ensuring they have the energy they need when they need it. Several energy assistance programs are available—including weatherization assistance to make sure your house is winter-ready. Check with your utility to see what programs may be available to you,” Meyer continued.

According to the outlook, energy efficiency has reduced consumption per customer, regardless of winter temperature, helping to reduce bills and enabling utilities to meet the needs of more customers than ever before. Households heating with natural gas have seen inflation-adjusted energy costs decline over time, while an equivalent annual electric bill has remained flat. In total, natural gas expenditures make up just 1.1% ($867) of all annual household expenses for the average American household—less than gasoline ($2,449), electricity ($1,763), or cell phone service ($1,270).

Natural gas production is rising to meet growing requirements. Natural gas demand growth expectations have risen between 5 to 9% through 2026 as a result of LNG export growth. The natural gas drilling rig count is up 18%, even as oil has declined, and despite increased exports, storage inventories are filled above the five-year average as the withdrawal season approaches, signaling strong preparedness for the winter heating season. Inflation-adjusted prices for natural gas also remain historically low, showing continued reliable affordability for American families, businesses, and industry.

Download the Fox Weather App to keep up on the latest weather news. Stay tuned to the Fox Business Network for the best in biz! Call phil Flynn to open your account at 888-264-5665 or email me at pflynn@pricegroup.com.

Thanks,

Phil Flynn

Senior Market Analyst & Author of The Energy Report

Contributor to FOX Business Network

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