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Phil Flynn

Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665

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Time To Retreat. The Energy Report 08/26/2026

By On August 26, 2026 - 9:08 AM · In Market Commentaries, Phil Flynn Energy Report
 It’s time for oil to retreat again after growing expectations that it will only be a matter of time until Iran has to retreat. We saw that global oil prices fell sharply on Wednesday, extending a multi-day slide, as expectations that President Trump’s and Treasury Secretary Bessent’s maximum economic pressure campaign will bring Iran to its knees.
This comes as Iran and Oman held pivotal talks to temporarily reopen the Strait of Hormuz. West Texas Intermediate (WTI) crude futures dropped 2.7% to around $80.12 a barrel, while Brent crude futures declined 2.6% to $86.62 a barrel, representing a notable cooling off from recent geopolitical supply premium spikes.
Markets are clearly pricing in the growing odds that sustained sanctions and diplomatic isolation will force Tehran to the table, potentially restoring more normal flows through the critical chokepoint and removing a major source of upside risk that had been propping up prices for weeks.
And in the US oil is not the problem as US producers are pricing a record amount of oil production and even as we see big draws on oil products a retreat from record high Disel Crack spreads and the upcoming shoulder season should buy some time for refiners to catch up.
 And just yesterday the American Petroleum Institute aid that , U.S. commercial crude inventories rose 4.2 million barrels for the week ending August 21. That was well above the roughly 1.8–1.9 million barrels build the market was looking for and reversed the small 328,000-barrel draw from the prior week.
 Cushing stocks added about 1 million barrels after a draw the week before easing concerns of hitting the proverbial tank bottoms.
 Gasoline inventories dropped a solid 3.2 million barrels. That’s exactly why the gas crack is firmer than the diesel crack for a change — a reminder to refiners that we still need gasoline as well as diesel. Distillates fell roughly half a million barrels. Not bad, and better than expected. That’s good news for farmers who are firing up the diesel harvesters right now.
Diesel prices are still crazy high — AAA has the national average around $5.62 a gallon. But even at these levels, they’re still not as high as they got under the Biden administration, when diesel hit an all-time high of $5.82. Remember, that was after years of policies that actively discouraged investment in oil production and refining capacity.
Meanwhile, the national average for regular gasoline looks to trend  back below $4 a gallon. As refinery glitches get solved. That should ease the minds of a lot of people who were told we’d be looking at $8 or $10 gas. Still right now as of this morning  AAA shows regular at $4.10 and diesel at $5.62–$5.63. The  full EIA report due out later today.
And I think when you look at the big picture another failure of oil to surge back above that psychologically important $100 a barrel area he makes it less likely that that’s going to happen anytime soon and while there are some people out there that are convinced that it’s only a matter of time before oil surges to $100 a barrel the back end of the oil curve continues to disagree. Record-breaking us production workarounds from the UAE and OPEC for getting supply out a reduction in demand in China as they tapped into their strategic petroleum reserve means that we should see oil potentially try to get back into the 70s. Keep an eye on gaps on the chart because the oil prices have been filling them pretty regularly I think we have seen the peak of the so-called oil crisis and things are going to start getting better
Natural gas can break your heart, but today’s roughly 7-cent rally is encouraging to some producers.
Front-month prices bounced back toward the $2.82–$2.87 area after dipping to a one-week low, with the market finding support from revised hotter forecasts.
Fox Weather is reporting that we may still see meaningful cooling demand into early September, with above-average temperatures expected across the Gulf, Midwest, and Mid-Atlantic from roughly August 30 through September 8. That should keep power-burn elevated as air conditioners stay busy.
 At the same time, LNG exports are on the rise again after some recent softer flows and maintenance, helping soak up some of the record domestic production that has been weighing on the market.
Production remains near all-time highs (Lower-48 output averaging over 111 bcfd so far in August), and inventories are still comfortable—about 6% above the five-year average after the latest smaller-than-seasonal build.
That surplus has kept a lid on big upside moves all summer. Yet the combination of lingering heat and recovering feedgas demand to export terminals is giving the bulls a little breathing room and putting a floor under prices for now.
Producers who have been underwater on short-term cash flow are watching this bounce with cautious optimism—it doesn’t erase the bigger supply picture, but it helps.
Fox Weather continues to track the evolving temperature maps closely, and those shifts matter more than usual right now because the storage surplus means every degree of extra cooling demand counts. Download the Fox Weather app for the latest high-resolution forecasts, radar, and alerts so you can stay ahead of the demand swings that move this market.
For those looking to trade the levels, I’ve got specific Phil Flynn Trade Levels mapped out for natural gas (and the rest of the futures complex). Call 888-264-5665 for information on signing up for the trade levels service and to open a trading account with The PRICE Futures Group. We’ll walk you through the levels, the risk, and the setup. Email pflynn@pricegroup.com
Stay tuned to the Fox Business Network for ongoing coverage and analysis. Natural gas remains one of the most weather-sensitive and sentiment-driven markets out there—today’s bounce is a reminder that even in a well-supplied environment, the tape can still surprise to the upside when the forecasts turn hotter and export flows firm. We’ll keep watching the next weather updates and the upcoming storage report closely.

Thanks,

Phil Flynn

Senior Market Analyst & Author of The Energy Report

Contributor to FOX Business Network

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