Change is the Only Constant
- Long term shifts in oil demand now evident
- Changes in fuel utilization and economic development driving changes
- Q4 2025 may see oil demand weaker than Q3
- Robust natural gas supply trumps strong demand
Sincerely,
David Thompson, CMT
Executive Vice President
Powerhouse
(202) 333-5380
The Matrix
Ancient Greek philosophers are often misquoted on the internet. Whether Heraclitus actually said “change is the only constant in life” remains undetermined, but people who work in the energy sector certainly know this to be true. Market participants deal with fluctuations in price patterns every day, but change is not limited to short-term patterns.
Javier Blas, an analyst for Bloomberg, recently highlighted a fascinating shift in oil price seasonality. For years, global oil demand peaked as winter arrived in the Northern Hemisphere. Heating demand across the U.S., northern Europe, and Japan reached its
annual high in the fourth quarter of the year, typically pushing prices to their annual highs too. However, 2014 marked a noticeable inflection point. Since that point in time, the seasonal peak in oil demand has shifted to the third quarter. The graph below show the stark change.
Long term trends are generated and sustained by convergences of underlying factors such as weather, demographics, technology and economic cycles. In the case of oil demand these factors have been changing. As a winter heating fuel, oil has seen its market share decline, reducing Q4 demand. At the same time, the demand for crude oil to generate electricity for summer cooling in the growing economies of the Middle East has been growing. Saudi Arabia burned over 800,000 barrels per day (bpd) during last summer’s peak. Additionally, jet fuel demand has also been growing, and it typically peaks during the summer months of the Northern Hemisphere.
Some analysts estimate that global oil demand in Q3 will be 500,000 bpd greater than Q4. If OPEC+ maintains their commitment to bringing more oil to the market throughout the course of 2025, then the production decisions of the U.S. shale producers will have increased ramifications for the price of oil.
POWERHOUSE will continue to closely monitor demand trends for effects on seasonal price patterns for diesel, gas and propane. As the internet says, “may we live in interesting times.”
Supply/Demand Balances
Supply/demand data in the United States for the week ended July 11, 2025, were released by the Energy Information Administration.
Total commercial stocks of petroleum increased (⬆) 9.3 million barrels to 1.2558 billion barrels during the week ended July 11th, 2025.
Commercial crude oil supplies in the United States were lower (⬇) by 3.9 million barrels from the previous report week to 422.2 million barrels.
Crude oil inventory changes by PAD District:
PADD 1: Up (⬆) 0.2 million barrels to 9.4 million barrels
PADD 2: Down (⬇) 1.1 million barrels to 101.5 million barrels
PADD 3: Down (⬇) 1.9 million barrels to 238.8 million barrels
PADD 4: Down (⬇) 0.3 million barrels to 23.9 million barrels
PADD 5: Down (⬇) 0.6 million barrels to 49.3 million barrels
Cushing, Oklahoma, inventories were up (⬆) 0.2 million barrels to 21.4 million barrels.
Domestic crude oil production decreased (⬇) 10,000 barrels per day from the previous report at 13.375 million barrels per day.
Crude oil imports averaged 6.379 million barrels per day, a daily increase (⬆) of 366,000 barrels. Exports increased (⬆) 761,000 barrels daily to 3.518 million barrels per day.
Refineries used 93.9% of capacity; a decrease (⬇) of 0.8% from the previous report week.
Crude oil inputs to refineries decreased (⬇) 157,000 barrels daily; there were 16.849 million barrels per day of crude oil run to facilities. Gross inputs, which include blending stocks, decreased (⬇) 151,000 barrels daily to 17.048 million barrels daily.
Total petroleum product inventories increased (⬆) by 13.1 million barrels from the previous report week, down to 833.6 million barrels.
Total product demand decreased (⬇) 1,679,000 barrels daily to 19.184 million barrels per day.
Gasoline stocks increased (⬆) 3.4 million barrels from the previous report week; total stocks are 232.9 million barrels.
Demand for gasoline decreased (⬇) 670,000 barrels per day to 8.489 million barrels per day.
Distillate fuel oil stocks increased (⬆) 4.2 million barrels from the previous report week; distillate stocks are at 107.0 million barrels. EIA reported national distillate demand at 3.423 million barrels per day during the report week, a decrease (⬇) of 245,000 barrels daily.
Propane stocks rose (⬆) 4.5 million barrels from the previous report to 82.8 million barrels. The report estimated current demand at 438,000 barrels per day, a decrease (⬇) of 593,000 barrels daily from the previous report week.
Natural Gas
Despite forecasts calling for hotter than normal temperatures across the U.S. until at least August 6, natural gas futures prices have fallen off last week’s levels due to strong output and reduced LNG exports.
Natural gas production in the Lower 48 reached a daily record of 108.4 billion cubic feet per day (bcfd) on Tuesday. Exports from the ‘Big 8’ LNG exports facilities was pegged at 15.3 bcfd on Tuesday, down from a monthly record of 16.0 bcfd in April.
According to the EIA:
- Net injections into storage totaled 46 Bcf for the week ended July 11, compared with the five-year (2020–24) average net injections of 41 Bcf and last year’s net injections of 18 Bcf during the same week. Working natural gas stocks totaled 3,052 Bcf, which is 178 Bcf (6%) more than the five-year average and 156 Bcf (5%) lower than last year at this time.
- According to The Desk survey of natural gas analysts, estimates of the weekly net change to working natural gas stocks ranged from net injections of 35 Bcf to 55 Bcf, with a median estimate of 46 Bcf.
- The average rate of injections into storage is 24% higher than the five-year average so far in the refill season (April through October). If the rate of injections into storage matched the five-year average of 7.8 Bcf/d for the remainder of the refill season, the total inventory would be 3,931 Bcf on October 31, which is 178 Bcf higher than the five-year average of 3,753 Bcf for that time of year.
Was this helpful? We’d like your feedback.
Please respond to [email protected]
This material has been prepared by a sales or trading employee or agent of Powerhouse Brokers, LLC and is, or is in the nature of, a solicitation. This material is not a research report prepared by Powerhouse Brokers, LLC. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.
DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION.
The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Powerhouse Brokers, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.
Copyright 2025 Powerhouse Brokers, LLC, All rights reserved
