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The Energy Report

Phil Flynn
http://www.pricegroup.com/
pflynn@pricegroup.com


When Democrats Sweep, Does the Economy Sleep? The Energy Report 11/06/2026

Oil is trying to find its footing after a brutal week that priced in a faster end to the Iran war once the midterms cleared yet could they also be pricing in weaker petroleum demand on fears that Democratic policies may kill an economy that really is a booming economy. Economic data over the last few weeks shows booming numbers for growth, manufacturing, jobs and investment—right as the Democrats take power and start talking about slowing the AI buildout and tightening the screws on energy.

Consider that Third-quarter GDP came in at a 3.4% annualized pace, the fastest in a year, powered by solid consumer spending and a surge in business investment—especially equipment and the AI/data-center boom . Business spending on equipment jumped at a 20.9% rate.

Productivity in the nonfarm sector rose 3.6% in Q3. Manufacturing is no longer the weak link: the ISM manufacturing index hit 55.5 in October, the second-highest reading in more than four years and the tenth straight month of expansion. Factory production posted its strongest growth since late 2021. New orders stayed firmly in expansion. Factory employment has now grown for four consecutive months.

Jobs are still adding up. Unemployment held at 4.2% in September. Manufacturing has been adding workers (roughly 9,000 in September alone after earlier gains), and average hours in the sector have risen. The Atlanta Fed’s GDPNow tracker has been pointing to continued solid growth into the fourth quarter. Yet Americans voted Democratic because their gasoline prices were too high. Well, Mr Adams, so are mine.

The Impact on oil prices was clear. We see that oil futures are set for a sharp weekly drop—WTI is back in the high $80s to low $90s and Brent in the upper $90s after the midweek selloff that took both benchmarks to their lowest since late August—but Middle East supply risks are putting a floor under the market. Still, if you look at where we’re at in the markets right now, it’s possible that concerns the Democrats will slow the economy and the artificial intelligence revolution could put more downward pressure on oil prices. Oil has already been sliding on the idea that the midterm wipeout reduces the odds of further escalation in the Iran war. Brent is back in the mid-$90s after trading over $110, and some of the risk premium is coming out even though the conflict itself is still unresolved and inventories remain tight.

At the same time, the uncertainty over whether a Democratic Congress will push harder for some kind of peace deal adds another layer of demand-side risk. High prices are already starting to curb consumption, and JP Morgan is talking about the market slipping back into surplus. If the Democrats start throttling the AI boom on top of that, the demand hit gets bigger.

Could energy prices start to price in lower demand from a slowing economy as we see a reduction in the high-paying AI and data-center space? The numbers show how big that space has become. Global data-center power demand capacity is expected to jump about 31% this year to 161 GW, with AI servers making up roughly a third of it.

Electricity use from data centers is projected to rise 26% to 565 terawatt-hours. The big tech companies are pouring roughly $725 billion into AI infrastructure this year alone. That is real, high-paying demand for power, diesel, natural gas, and the whole energy complex. Democrats just won both chambers and a bunch of governorships while campaigning against that buildout.

Roughly 40% of planned U.S. data-center capacity sits in states whose new governors called for pauses or outright moratoriums—Texas, Ohio, Georgia and others. Bernie Sanders is already calling for a national data-center moratorium. Local ballot measures restricting them passed almost everywhere they were on the ballot. That is a direct threat to one of the fastest-growing sources of energy demand.

The Democrats remain the party of luddites and socialists when it comes to energy and industry. They are anti-fossil fuels, they push to close or restrict refineries, and they run on unrealistic panic over carbon emissions and fear-mongering around climate change to advance their lucrative green-energy agenda. Global emissions are still rising to record levels even after all the renewable subsidies and mandates. The green buildout has not delivered the reductions they promised, but it has delivered higher costs, permitting delays, and political pressure against the very infrastructure (refining, reliable power, data centers) that keeps the economy and AI moving. That combination—slower growth, slower AI, and continued hostility to fossil fuels—can start to get priced into lower energy demand.

Natural gas just got a little lighter after the EIA report — and producers are starting to blink! The EIA dropped its weekly storage numbers and the market took a step back. Working gas in storage sits at 3,801 Bcf after a +77 Bcf injection for the week ending October 30.

That’s still 109 Bcf below last year (–2.8%), but now 54 Bcf above the five-year average (+1.4%). The build came in a tad under most guesses (consensus was around 80–81 Bcf), yet it was still bigger than the normal five-year injection for this time of year. So the surplus vs. the five-year average got a little wider while the year-ago deficit shrank a bit. Storage is comfortably inside the normal range — no drama there.

Prices had already been soft from mild weather and solid supply. After the print they eased a touch further, settling in the mid-$2.90s. Mild early-November conditions should keep the injections coming for a little longer before real winter withdrawals kick in. In short: the numbers were not scary enough to spark a rally, so gas retracted.

But here’s the interesting twist — the producers are feeling it.

Shale drillers are starting to cut back in what’s turning into a rare early-winter curtailment. U.S. production has slipped to around 109.5 Bcf a day — the lowest since January and down sharply from the 114.5 we saw just last Friday. Some Appalachian gas is even trading near $1. December nat gas is still holding up better than the prompt, but the message from the field is clear: soft prices are finally forcing some supply offline. That could put a floor under the market if the cuts stick, even with storage looking comfortable.

Fox Weather outlook — still the wild card, but leaning friendly for consumers and the Fox Weather ap. Fox Weather has been highlighting the Super El Niño setup. That pattern usually means milder-than-normal temperatures across the northern and eastern U.S. (less heating demand) and a stormier, wetter southern tier. There’s also talk of a possible early polar-vortex disruption that could deliver some brief cold shots, but the bigger El Niño signal still points toward a warmer-leaning winter overall, especially in the East and Midwest.

That lines up with the EIA’s Winter Fuels Outlook, which sees slightly fewer heating degree days than the 10-year average. Near-term models are still squabbling (some colder European runs versus milder U.S. runs in the 10–15 day window), so short-term price swings will stay weather-driven. But the combination of ample storage, a milder seasonal backdrop, and early producer cuts keeps things interesting — a lid on prices for now, with a potential floor forming underneath.

Fox Weather is also reporting that East Coast soaker threatens millions in Northeast with flash flooding, while Mid-Atlantic faces severe storms. The rain is associated with a massive cross-country storm that has impacted more than 35 states. They say that “ A second batch of storms will soak the East Coast Friday, with the heaviest rain and potential flash flooding expected right along the coast from the Carolinas to New England in the final act of a powerful, week-long cross-country storm that delivered devastating flooding across parts of the Southwest and the southern Appalachians. A Level 2 out of 4 flash flood risk is in place from eastern Long Island into parts of southern New England, including Providence and Boston. Meanwhile, parts of the Delmarva, as well as eastern North Carolina and northeastern South Carolina could see severe storms Friday afternoon, with damaging wind gusts and even an isolated tornado or two.”

That’s why you need to download the Fox Weather app to stay on top of the latest market-moving weather news. Stay tuned to Fox Business Network — Invested in You. Sign up for the wildly popular Phil Flynn Daily Trade Levels and the Phil Flynn Manic Metals Report. Open your Price Group account today — call 888-264-5665 or email pflynn@pricegroup.com.



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Phil is one of the world's leading energy market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil's market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide.

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Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Alaron Trading Corp. its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

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