Week Ending August 1

Oil pares gains after soft US economic data

The WTI prompt-month contract fell $1.93 to settle at $67.33/Bbl on the week. Despite Friday’s drop, the WTI front-month futures rose over $2 on the week. Oil surged on the reintroduction of geopolitical risk that threatens Russian barrels however the market cooled on Friday on weak US economic data.

Monday morning, President Trump announced that he would be reducing the deadline for Russia to reach an agreement with Ukraine from 60 day to “10-12 days.” The President reiterated that he would enact economic penalties, including secondary sanctions, if Russia did not reach a ceasefire in the coming days. Trump also expressed ire for India’s large purchases of Russian crude, threatening a possible still-undefined penalty for the large purchases. According to Rystad Energy, OPEC+ countries could potentially offset any shortfalls of Russian barrels stemming from further pressure from Western nations.

OPEC+ is set to meet on August 3 to discuss production quota increases for the month of September. The market expects the group to announce another hike of ~550 MBbl/d completing the full 2.5 MMBbl/d unwind a full year ahead of schedule. Before the latest sanctions and tariff threats, global crude markets were expected to be in surplus. According to the latest IEA forecast, the global oil market is expected to move deeper into surplus, with supply exceeding demand by over 3 MMBbl/d in Q1 2026.

Demand side issues continue as countries rush to make or renegotiate trade terms with the US. There was a flurry of activity this week with large trading partners announcing trade deals with the US. The EU and South Korea will now face a 15% levy on imported goods to the US. Along with the Trump’s disapproval over purchases of Russian barrels, the country of India has been tagged with a 25% tariff rate. Conversations with major trading partners, Brazil, Canada, and Mexico, continues.

Oil prices sank as weaker-than-expected US economic data softened the economy’s demand outlook. US jobs growth cooled sharply over the past three months, while factory activity contracted in July at the fastest rate in nine months, in a sign that the economy might be declining amid increased trade uncertainty.

The curve shifted higher this week on possible disruptions to Russian barrels but cooled after weak US data raised demand concerns. As OPEC+ is expected to bring back more than half a million barrels in September and demand growth concerns continue, AEGIS maintains a neutral view on prices.

Natural gas posts small weekly loss as August contract expires

The September henry Hub contract is now the prompt month, after the August contract settled at $3.08/MMbtu. September fell 5c this week to $3.11/MMbtu, bringing total losses over the past two weeks to 49c. Winter ‘25/’26 finished the week at $4.06/MMbtu, and Summer ’26 settled at $3.83/MMbtu.

Public companies have begun reporting Q2 earnings and forward guidance, providing some insight into how larger producers may be planning their production and activity for the remainder of the year. Two of the largest Haynesville producers, Expand and Comstock, both guided towards flat production going forward. This does not represent any change from their prior outlook. If production from the Haynesville does not rise substantially this winter, the supply-demand balance could tighten significantly, as LNG feedgas demand continues to grow and gas output from the Permian will be constrained until late 2026.

While producer guidance may show a more measured approach, expectations of demand over the next few years continue to grow. This week Venture Global announced they have made a final investment decision for the Calcasieu Pass 2 export terminal. The 2.67 Bcf/d plant will be located adjacent to the original Calcasieu Pass facility and enter service in late 2027.

With exports from the Gulf Coast continuing to grow, more pipeline capacity will be needed to supply this demand. WhiteWater Midstream announced this week that they would be boosting the capacity of the planned Pelican pipeline from 2 Bcf/d to 2.5 Bcf/d. This pipe will ship gas from the Haynesville area down to the Gillis Hub in southern Louisiana, starting in the first half of 2027.

AEGIS holds a neutral view on near-term prices and a bullish view on Winter ‘25/’26 and beyond. Swaps are recommended in the summer months, while costless collars may be preferred in the winter.