Written Commentary
The Ghost in the Machine Q3 2025
October 6, 2025
CRUDE OIL
December Crude Oil was slightly higher overnight. The API report was slightly bearish for crude relative to expectations and slightly bullish for the products. Reuters, quoting market sources, said API crude oil stocks were +2.78 million barrels for the week ending October 3 versus an average trade expectation of +1.9 million. Gasoline stocks were -1.25 million barrels versus -900,000 expected, and distillate stocks were -1.82 million versus -1.2 million expected. The EIA report is scheduled to be released today despite the government shutdown. Refinery runs are expected to be -1.0% to 90.4%. In their Short Term Energy Outlook released yesterday, EIA forecast US oil production to average a record 13.53 million barrels per day this year, up from its previous forecast of 13.44 million bpd and up from 13.23 million bpd last year. EIA also said it expects crude oil inventories to rise throughout next year and put significant downward pressure on prices in the months ahead. EIA is expecting production to fall to 13.51 million bpd in 2026, a smaller decline than previously forecast.
NATURAL GAS
The natural gas market has received a boost this month from a drop in US production and higher LNG exports that have helped stem the growth in US supply. LSEG said average gas output in the Lower 48 states has fallen to 106.5 billion cubic feet per day so far in October, down from 107.4 bcfd in September and the record 108.0 bcfd in August. The average amount of gas flowing to the eight big U.S. LNG export plants has risen to 16.1 bcfd so far in October, up from 15.7 bcfd in September and above the record high of 16.0 bcfd in April. The 6-10 and 8-14-day forecast calls for above normal temperatures east of the Rockies, which take us at least to October 21.
PRODUCTS
The API report was slightly bullish for the products against expectations. Reuters, quoting market sources said API gasoline stocks were -1.25 million barrels versus -900,000 expected, and distillate stocks were -1.82 million versus -1.2 million expected. The EIA report is scheduled to be released today despite the government shutdown. Refinery runs are expected to be -1.0% to 90.4%.
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