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The Energy Report

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


Glut Enough! The Energy Report 09/12/2025

If you repeat the talk of an oil glut over and over again, maybe you can make it happen.

The International Energy Agency (IEA), in their latest report, rinses and repeats earlier calls for a massive oil glut. The IEA, which famously had to adjust their underreporting of demand numbers for 14 years, are now playing Nostradamus, forecasting a global oil supply surge of 2.7 million barrels per day (bpd) in 2025—up from their earlier call of 2.5 million bpd. And hold onto your hard hats, because they’re projecting another 2.1 million bpd jump in 2026. Why the flood of oil that might make even Noah a little nervous?

The IEA says it’s because OPEC+ is increasing oil production, and they expect non-OPEC participants to expand their output as well, which they predict will significantly increase market supply. They claim we’ll see a massive surplus that could top 3 million bpd by 2026. But wait—plot twist! The IEA also bumped up their demand growth forecast for this year to 740,000 bpd, showing the world’s still thirsty for that sweet crude.

So, at least the IEA is consistent in underestimating demand. Now, I think you’ll find they’re going to be consistent in overestimating production. Meanwhile, OPEC has a different, more realistic view of the oil world. They’re seeing higher demand in 2026 and hinting at a market deficit instead of a surplus. Talk about a tale of two forecasts. So, what’s the deal? Is it a glut or a squeeze?

The IEA’s waving the caution flag, warning of a potential oversupply, while OPEC+, which is producing and selling the oil, sees a supply deficit. While OPEC hasn’t been perfect, I think in this case they’ve got a better handle on reality. As I’ve pointed out before, the IEA has made some wildly inaccurate calls in the past, such as claiming the world can afford to stop investing in fossil fuels, that we’d see peak oil demand, and that we could somehow power the energy future with alternative energies—some of which don’t even exist yet. In the short term, this IEA report has pushed oil prices back toward the lower end of their never-ending trading range.

But we should find support once again in the low $60s, as prices are having a hard time breaking above the $65-a-barrel area. So, continue to play that range until proven wrong—that is, until we see a jump to the upside. Call Phil Flynn if you need help at 888-265-5665.

I’m concerned that the IEA’s talk of a glut will create a situation that makes it difficult for non-OPEC producers to raise output. If you keep telling shale producers, for example, that we’re heading into a massive oil glut, they’re going to be a lot less likely to increase rig counts or investment. And if the IEA keeps talking down the market, the likelihood that producers will respond to signs of strong demand diminishes, meaning we could be caught short of supply.

How long will it take for Governor Gavin Newsom to get gas prices to $10 a gallon? After doing everything in his power to demonize California’s oil and gas industry, he now needs them to save his political future by trying to keep refineries from closing in California. The Los Angeles Times reported that California lawmakers introduced a last-minute deal that would streamline environmental approvals for up to 2,000 new wells annually in oil-rich Kern County while tightening regulatory requirements for offshore drilling. The looming shutdown of a couple of California refineries is throwing a wrench in Governor Newsom’s plans—and let’s be honest, it’s got the Democrats in a bind.

They’ve spent years pushing clean energy with gusto, but now the reality of rising gas prices is knocking at the door. It’s a classic case of policy colliding head-on with the wallet, and suddenly those refineries look a lot more necessary than anyone wanted to admit. It’s also another example of how Democratic policies, while seemingly well-intentioned, actually do more to hurt the poor and middle class, whom they supposedly champion. Governor Newsom’s radical outlook on energy has placed an unnecessary burden on the people of his state.

Natural gas got hit with a very bearish Energy Information Administration (EIA) weekly report. Here’s what the latest EIA report shows: as of Friday, September 5, 2025, there are 3,343 billion cubic feet of working natural gas in storage. That’s a jump of 71 Bcf over the previous week. If you’re keeping track, that’s 38 Bcf less than what was in storage at this time last year, but it’s still 188 Bcf above the five-year average of 3,155 Bcf. In other words, we’re sitting comfortably within the typical historical range for this time of year.

But if you want to look at the bright side, further down the curve, we expect demand to be significantly higher. There are some expectations that the Midwest could see a colder-than-normal winter, though it’s a bit early to make those predictions. At the same time, we should see record demand for artificial intelligence and liquefied natural gas exports. This could be a market at a very significant bottom. But if we don’t get a cold winter, we’ll likely squeak by within the five-year average. Even so, demand will be higher, so keep that in mind—it could shift the dynamic of this market as we head into winter.

Also, Fox Weather is reporting that after a lull in tropical activity as we approached the statistical peak of the 2025 Atlantic hurricane season, the National Hurricane Center (NHC) is monitoring a tropical wave emerging off the coast of Africa that’s producing a broad area of showers and thunderstorms. History shows that September 10 is typically the day when there’s the best chance of having active tropical systems in the Atlantic Ocean. As of Friday morning, the area has a medium chance of development over the next week. “Environmental conditions appear conducive for some gradual development of this system over the next several days,” said the NHC on Friday morning. Forecasters noted that a tropical depression could form during the “early to middle part of next week” as the wave moves west or west-northwest over the eastern and central tropical Atlantic.



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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.

Contact Phil at 1-888-264-5665 or pflynn@pricegroup.com.