Lost At Sea. The Energy Report 10/29/2025

Where is the oil glut? Lost at sea, I guess. Fresh data from the American Petroleum Institute  (API) showed a bullish drawdown in U.S. oil supplies, with crude inventories tumbling by a hefty 4 million barrels. Gasoline and distillate stocks also took a nosedive, down by 6.3 million and 4.4 million barrels, respectively. These numbers paint a picture of tightening supplies, but the market’s attention is glued to the international stage and the deal making by President Donald J Trump and the big Fed Meeting.

After months of intense negotiations, the United States and South Korea have triumphantly sealed a groundbreaking trade deal that expands on their July framework. South Korea is set to pour a staggering $150 billion into shipbuilding projects across the U.S. and deliver an eye-popping $200 billion in cash as part of its investment commitment. This investment is capped at $20 billion per year, highlighting the scale of the partnership.

Oil prices unimpressed with bullish API data Wednesday as markets awaited the Trump-Xi summit in Busan, hoping for eased trade tensions. However, expectations are tempered by speculations that OPEC+ may raise production quotas, potentially halting a price rally. Yet the market may want to consider that this increase is very small and so is OPEC’s spare capacity. Meanwhile, a quarter-point rate cut would lower the benchmark to 3.75%-4%, marking the Fed’s second reduction this year better too late Jerome Powell than never.

It’s kind of interesting the negativity on oil prices continues even as the petroleum products continue to be very tight in the United States. Demand is at the highest level in years staying close to record highs. There seems to be a big belief that this floating storage is really indicative of an oil glut and until the market realizes that’s not the case, we’re going to have a hard time rallying. Yet if we continue to get data like we’ve seen in the American Petroleum Institute report and if it’s confirmed by the EIA, we could see it turn around and fortunes for the oil market where the mood has just been very negative and the perception of an oil glut overtake the actual data that we’re getting from these reporting agencies.

Natural gas prices declined after forecasts predicted warmer weather. Looking ahead to winter, the market remains highly compelling; if the season is colder than expected, demand could surge to record highs due to increased LNG exports and growing needs from data centers and power facilities. So, traders should download the Fox Weather aps to keep up on this and if we get a real winter, natural gas prices could soar. Call Phil Flynn at 888-264-5665 for further discussion. I am giving me clients ideas on how to play this.

Consider that 2014 was the last time the contiguous United States experienced below-normal seasonal temperatures overall. That winter averaged 31.3°F, about 1°F below the 20th-century baseline, ranking as the 34th coldest in NOAA records since 1895. It was colder than the prior two winters (both above average) and all seasons since, including Spring 2014 (near average at 51.1°F, 0.2°F above) and Summer 2014 (record warm). The season featured a split pattern with cold in the East and warmth in the West due to a “polar vortex,” but the national average was below normal. Since then, warming trends have driven all seasons above average, with 2023-2024 being the warmest winter on record.

Fox Weather predicts a warmer winter for most of the country, including the Southwest, due to limited cooling influences. However, the northern Great Lakes may see colder conditions as local cooling offsets the broader warming trend. In summary, expect above-average temperatures in the South and below-average temperatures in the North. And if weather patterns do shift to colder than normal, natural gas prices could see prices double very easily. LNG exports are expected to rise significantly, and residential and commercial heating demand should increase by 3% to 5% year over year due to a colder shoulder season. These projections are already seen by many firms forecasting for prices going into winter.

That’s why it’s very important that you download the Fox Weather app. You should also stay tuned to the Fox Business Network Invested in you! Call to get signed up for the Phil Flynn Daily Trade Levels by calling 888-264-5665 or email me at pflynn@pricegroup.com.