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Gas lines and pipelines, oil prices are on the rise, supported by incredibly strong inventory numbers and ongoing uncertainty about the prospects for peace between Russia and Ukraine. And oil should benefit from reports that the EU and US reach agreement on joint statement outlining trade deal.Yet as peace negotiations continue, the big question remains: when will President Trump’s patience wear thin and prompt him to lay down the gauntlet with sanctions on Russia if peace fails?

Putin is going to be pressured of course not only by the world community to come to an agreement but also by the Russian people that must be getting tired with Russian soldier’s coming home in body bags and the disruptions that are impacting the Russian economy. And now word has it that a US-EU trade deal is near so that Russia may be further isolated economically from the world community. Reports indicate that Russian gas stations are running out of gasoline, with mile-long lines forming after Ukraine drones attacked oil refineries in Russia. For the Russian people, the war is once again impacting daily life. We are still awaiting news on whether Russia will agree to a meeting with Volodymyr Zelensky and whether a ceasefire will be reached.

Another key development to watch right now is Iran. Earlier this week, the Iranian military challenged the Ayatollah—a move that once would have been a death sentence. Now, there are increasing signs that Iran will not permit nuclear inspections, a decision that could prompt crisis talks between the UN and the US. Some in Iran are boasting that the recent US military attack failed to disable their nuclear facilities, but these claims may be mere bravado. Iran is in a precarious position both economically and militarily. With some of its leadership eliminated, the loyalty of the remaining generals to the Ayatollah may be wavering.

On the flip side, the market is focusing on U.S. inventories, which are currently very bullish and do not fit the narrative of a weakening economy. The Energy Information Administration (EIA) gave the energy market a shot in the arm with a hefty crude draw and a gasoline supply dip. U.S. commercial crude oil inventories—excluding those strategic barrels—dropped by a whopping 6 million barrels from the previous week, landing at 420.7 million barrels. That’s about 6% below the five-year average.

Gasoline inventories also felt the squeeze, sliding by 2.7 million barrels and ticking down to 1% below the five-year average. Both finished gasoline and blending components took a hit.

Distillate fuel inventories climbed by 2.3 million barrels, but don’t pop the champagne yet—they’re still 13% under the five-year average. Winter is coming. To keep distilled supplies flowing, it’s going to be very important to see how the drive for peace plays out.

Propane and propylene, however, are the stars this week with a strong 2.6-million-barrel increase, putting them 12% above the five-year mark. Total commercial petroleum inventories dropped by 4.2 million barrels.

Men work from sun to sun, but refiners work is never done. Refiners have been burning midnight oil! Last week, U.S. crude oil refinery inputs averaged a hefty 17.2 million barrels per day, nudging up by 28,000 barrels from the week before. That’s refineries running hot—at a sizzling 96.6% of operable capacity! On the output side, gasoline production cooled a bit, settling at 9.6 million barrels per day, but distillate fuel production cranked higher, jumping by 193,000 barrels to average 5.3 million barrels daily.

Crude oil imports? They slipped to 6.5 million barrels per day, down 423,000 from the previous week’s tally. Looking at the bigger picture, the four-week average for crude imports sits at around 6.4 million barrels per day, marking a 2.3% dip compared to the same stretch last year. The numbers show a market still finding its footing, with refiners adjusting to shifting tides and global demand signals. Last week, the U.S. brought in an average of 655,000 barrels a day of motor gasoline—including both finished gas and those all-important blending components. Distillate fuel imports? They came in at 124,000 barrels a day.

Demand continues to be solid as the economy is strong. U.S. petroleum product supplied averaged a robust 21.1 million barrels a day—up a solid 3.3% from this time last year. That’s a telltale sign the market’s appetite isn’t just healthy, it’s thriving! Gasoline demand, while down just a hair at 9 million barrels a day on the four-week average—off by only 1.2% from last year—still shows Americans aren’t ready to park their cars anytime soon.

Distillate fuel demand flexed its muscles, surging 4.7% over last year to hit 3.7 million barrels a day. And jet fuel? Forget turbulence, it’s soaring—a 7.4% jump compared to the same four-week stretch last year. All signs point to an energy market that’s burning bright, fueled by relentless demand and a consumer base that just won’t quit.

Natural gas is still weak as traders deal with storms and near record production. Natural gas prices may be improving as lower prices appear to be reducing production. Celsius Energy notes that while LNG export demand has declined, natural gas production has also dropped from nearly 110 BCF/d in late July to 106.7 BCF/d today, though this figure may be revised upward later. Production remains up by 4.8 BCF/d compared to 2024.

Still Mather Nature could throw us a monkey wrench. Fox Weather reports that, ”Hurricane Erin slams North Carolina, Virginia coasts with strong winds, powerful waves, dangerous rip currents. Tens of thousands had been evacuated off the most vulnerable of North Carolina’s Outer Banks as a storm surge of up to 4 feet was likely. Meanwhile, beaches remained off limits to swimming up and down the East Coast as dangerous waves and potentially deadly rip currents angrily pounded the shorelines. Hurricane Erin was still a Category 2 storm with maximum sustained winds of 105 mph on Thursday morning.

While the center of Erin and its peak winds were some 200 miles east-southeast of Cape Hatteras, North Carolina, tropical-storm-force winds extended outward up to 320 miles, reaching parts of the North Carolina and Virginia coastlines, where Tropical Storm Warnings lingered into Thursday. That is not all, energy traders. Fox Weather reports that Invest 99L, other tropical disturbances behind Hurricane Erin have rough road ahead.. A significant jet stream dip over the northeastern U.S. is expected to serve as a mechanism to steer any tropical development northward. The next tropical storms that will develop across the Atlantic Basin will be named Fernand and Gabrielle.

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