Natural Gas and Oil Forecast: U.S. Stock Build Tests WTI as Saudi Supply Risks Persist

• API reported a 7.1 million barrel crude build versus an expected 1.6 million barrel draw, with gasoline and distillate inventories also increasing unexpectedly
• Saudi Arabia's East-West pipeline (carrying 4-5 million barrels per day) remains halted after attacks, with some September cargoes to Europe canceled while the kingdom offers alternative Asian supplies via ship-to-ship transfers near Oman
• Strait of Hormuz traffic dropped to just four vessel transits Tuesday versus a 10-day average of 18, significantly constraining the waterway that normally handles one-fifth of global oil and LNG supplies

Market Summary: Oil and Natural Gas Navigate Supply Disruptions and Inventory Builds

Key Market Data

Oil markets face conflicting signals as U.S. crude inventories unexpectedly rose by 7.1 million barrels versus forecasts of a 1.6 million barrel draw, according to the American Petroleum Institute. Gasoline and distillate stocks also increased, suggesting supply is building faster than anticipated.

Supply Disruptions

Saudi Arabia remains the primary concern, having halted loadings at Yanbu port following attacks on its East-West pipeline, which previously carried 4-5 million barrels per day. The kingdom canceled some September cargoes to European clients while offering additional Asian supply through ship-to-ship transfers near Sohar, Oman.

The Strait of Hormuz continues experiencing severe disruptions, with only 4 vessel transits on Tuesday compared to the 10-day average of 18. The waterway typically handles one-fifth of global oil and LNG supplies. Middle East tensions have eliminated 36 million tons of LNG capacity, primarily from Qatar and UAE.

Natural Gas Outlook

U.S. natural gas remains strong, with the EIA forecasting record dry-gas production of 111.7 billion cubic feet per day in 2026. Inventories are projected 5% above the 5-year average heading into winter, positioning the U.S. to balance global LNG shortfalls.

Technical Levels

• Natural Gas: Trading at $2.90, facing resistance at $2.92-$2.97, support at $2.84
• WTI Crude: At $104.20, resistance at $106.69, support at $103.16
• Brent Crude: Trading at $107.56, targeting $109.87 resistance, support at $105.14

Market Bias: Moderately bullish across all three commodities despite inventory headwinds, supported by ongoing Middle East supply constraints.