Oil & Gas Prices up on July 7

[dan_s]

Most of our model portfolio companies were down today because of the investors over-reacted to the OPEC+ larger than expected increase in quotas in August. As I have posted here many times, the quota increases do not = actual supply increases. More than half of the cartel countries have been and will continue to be maxed out on production. They cannot produce up to their quotas. Saudi Arabia is the only country with a significant amount of spare capacity that can be ramped up, but even Saudi Arabia cannot do it quickly.

Trading Economics
WTI Oil Price
WTI crude oil futures rose 1.4% to settle at $67.90 per barrel on Monday, rebounding from earlier lows despite a larger-than-expected production increase from OPEC+ and concerns over potential US tariffs.
> The group agreed to raise output by 548,000 barrels per day in August, with nearly 80% of earlier voluntary cuts expected to return, mainly from Saudi Arabia.
> KEY: OPEC+ cited a stable economic outlook and strong fundamentals, with another hike to be considered at the August 3 meeting. This move follows slower increases of 411,000 bpd from May through July. In a show of confidence in demand, Saudi Arabia raised the August price of its Arab Light crude to a four-month high for Asia.
> Meanwhile, markets are watching US trade policy, with Trump’s country-specific tariffs set to begin August 1.
> While oil remains supported by supply tightness, tariff uncertainty continues to cloud the outlook for the second half of 2025. < Note that TE is finally mentioning "supply tightness". U.S. and total OECD petroleum inventories are significantly below normal for this time of year.

Natural Gas
After being down all morning, the front month NYMEX contract (AUG25) close up 2 cents today.
> US natural gas futures fell below $3.4/MMBtu last week after EIA data showed the 11th straight week of above-average storage injections. < The injects were actually 5 Bcf below the 5-year average for the week ending June 27. The next four weekly builds should be near the 5-year average.
> Energy firms added 55 bcf to storage last week, exceeding expectations of 53 bcf and well above the 35 bcf added a year earlier.
> Although the injection was slightly below the five-year average of 61 bcf, the trend reflects robust supply.
> Meanwhile, hotter mid-July forecasts are expected to drive up air-conditioning demand and gas-fired power usage.
> LNG export activity is also picking up, with average flows to the eight major US LNG plants rising to 15.4 bcfd in early July, up from 14.4 bcfd in June, as plants are gradually returning from spring maintenance.
> Golden Pass LNG requested US approval to export LNG starting October 1, signaling that the facility is close to startup. < Golden Pass Phase One is rather small. Plaquemines and Corpus Christi are the larger increases in 2025. By the end of 2025 U.S. LNG export capacity should be 16.9 Bcf per day, 2.0 Bcfpd higher YOY. By the end of 2026 U.S. LNG export capacity is expected to be 21.7 Bcf per day.