Week Ending September 5

Oil Extends Losses to Three-Month Low on OPEC+ Supply Risk and Weak Macro Signals

WTI fell for a third straight session Friday, settling at its lowest level since late May as bearish fundamentals and macroeconomic data weighed on sentiment. The WTI prompt-month contract closed down $1.61 to $61.87/Bbl, capping a week dominated by oversupply fears.

Market focus is now on this Sunday’s OPEC+ meeting, where Saudi Arabia is urging the group to revive a 1.66 MMBbl/d tranche of curtailed production ahead of its scheduled return in 2026. Even the prospect of additional supply has weighed on sentiment, with traders worried that an early return of barrels could deepen an already fragile 4Q balance and pressure prices further.

US data added to the bearish tone. The Bureau of Labor Statistics reported only 22,000 jobs added in August, well below the 75,000 expected by analysts, signaling slowing economic momentum. The latest EIA report leaned bearish as well, showing a surprise build in commercial crude inventories of roughly 600 MBbls and a 2.1 MMBbl increase at Cushing, which pushed stocks at the hub to their highest level since early May.

Analysts’ outlooks reflected the market’s cautious mood. Goldman Sachs reiterated its forecast for Brent to fall to the low $50s/Bbl by late 2026 on the back of a projected 1.8 MMBbl/d global surplus driven by strong non-OPEC ex-US supply growth. UBS, meanwhile, expects Brent to remain rangebound in the $60–$70/Bbl area near term, supported by relatively tight balances, before gradually easing toward $62/Bbl by year-end as incremental supply comes online.

Overall, this week reinforced the bearish tilt we flagged in August. While geopolitical risks, from ongoing Ukrainian strikes on Russian refineries to renewed US naval activity off Venezuela, are offering near-term support, the prevailing setup points toward weaker conditions into 4Q and 2026. AEGIS maintains a bearish market outlook.

Natural gas posts second weekly gain despite weak near-term demand

The October Henry Hub contract advanced 4c this week to $3.03/MMbtu, bringing total gains over the past two weeks to 23c. While this was the second week of higher prices for the prompt month, the rest of the curve moved lower, reversing gains from last week. The Winter ‘25/’26 strip lost 4c to settle at $3.79/MMbtu and Summer ’26 fell 6c to $3.72/MMbtu.

The recovery in prompt prices has come despite little improvement in underlying fundamentals. Last week ended with two-week weather forecasts showing temperatures potentially rising above the ten-year average by mid-September, however this outlook had reversed by the end of last weekend. While forecasts now show temperatures warming up to the ten-year average around mid-September, this is still a relatively week outlook for power demand. Reduced weather-driven demand should result in more above-average storage builds and keep pressure on prompt pricing.

Meanwhile, Lower-48 gas production dropped this week, with volumes falling to 106.3 Bcf/d, according to data from S&P. This has primarily been driven by maintenance in the Northeast and South Central. This drop in supply should prove temporary as pipeline work concludes over the next week.

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.