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Each week Josef Schachter gives you his insights into global events, price forecasts and the fundamentals of the energy sector. Josef offers a twice monthly Black Gold newsletter covering the general energy market and 37 Domestic and International E&P, energy service and pipeline/infrastructure/royalty companies with regular quarterly updates. We also hold quarterly webinars (next one Thursday August 28th) and provide Action BUY and SELL Alerts for paid subscribers. Learn more.
Important Update: Eye on Energy is Evolving
We have been publishing the weekly Eye on Energy as an extension of the Schachter Energy Report to provide timely and expanded insights on the Energy and World Market. Over time, the volume of information and the effort required to produce this report have grown significantly. As a result, we are transitioning Eye on Energy to a paid subscription model on Substack to ensure its continued quality and sustainability.
Free Access Until September 10, 2025:
Eye on Energy will continue to be available at no cost until September 10, 2025. After this date, readers will have the option to subscribe on Substack at a rate of $30/month or $250/year. To subscribe on Substack go to https://josefschachter.substack.com/
Special Note for Schachter Energy Report Subscribers:
If you are a current subscriber to the Schachter Energy Report, you will continue to receive Eye on Energy as part of your Black Gold subscription at no additional cost.
Limited-Time Offer:
From now until September 30, we are offering a special promotion for those interested in becoming Black Gold subscribers. New annual subscribers will receive $100 off their first year. To redeem this offer, enter coupon code SER100 at checkout using the link below:
https://schachterenergyreport.ca/subscriptions/
We sincerely thank all of our readers for your continued interest and support.
Warm regards,
The Schachter Energy Report Team
Summary:
Crude oil prices have declined >US$2.50/b from a week ago (today’s low US$61.94/b versus US$64.66/b last week) as rising inventories (see EIA section) during the summer season depressed prices. Normally we see drawdowns at this time of year and inventories start to rise once we enter September. Storage volumes grow until winter arrives and then regular weekly drawdowns occur. We expect that WTI will breach US$60/b in the coming weeks and bottom in the US$57- US$59/b area. When this occurs we expect another BUY signal to be triggered and we plan to add additional BUY ideas for SER subscribers. The window for weaker prices is until winter arrives when we expect prices to rise over US$70/b and maybe see days over US$80/b in very cold periods during winter 2025 – 2026. The upcoming low and BUY signal will be the second opportunity to buy energy stocks at great bargain prices. The first 2025 signal occurred in April and was a wonderful period to add to energy positions.
This Friday US President Trump meets Russian President Putin in Alaska to arrange a process to end the war in Ukraine. The first goal is a ceasefire. Not much can be done without Ukraine’s participation so hopes are low for a major breakthrough. Putin remains adamant that the area of eastern Ukraine that is the home of Russians for centuries become part of Russia and this is a non-starter for President Zelensky.
The ongoing US stock market rally (new highs for S&P 500 and NASDAQ but not the Dow Jones) has been focused on the AI and tech sectors and is very narrow in leadership. NVIDIA and META have crossed market caps of >US$4T. We saw this same gapping up of MAG7 and AI stocks in early February 2025 just before the Dow fell from 45,100 to 36,600 or a decline in 2.5 months of 19%. With sluggish economic data especially in the consumer areas, we suspect we could see a 20%+ general stock market correction (led by tech) over the coming months. Caveat Emptor! More on this below.
Investors should consider building up some cash reserves and be ready for a material market correction. It could get very nasty in September!
This week’s Eye on Energy Details:
- US coffers are seeing revenue of US$25B per month at current tariff rates. So annualizing at US$300B is the start. More monthly receipts should come as more country deals are arranged. New tariffs like those on Nvidia and AMD of 15% on their exports of chips to China, add to receipts.
- US inflation data was a bit hot in our view. The CPI in July rose 0.2% on a monthly basis for a 2.7% annual rate (matching the June number). Unfortunately the core CPI rose 0.3% for an annual rate of 3.1% and above expectations. It is worrisome that much of the tariffs do not yet show up in the domestic market. Core inflation in the coming months from goods could have much more impact on the upside. The current tariff rate of 9.1% is expected to rise to 17.6% by October.
- President Trump after firing the lead at the Bureau of Labor Statistics because of the low July jobs number and the significant negative revisions has appointed E.J Antoni as the new head. He has been a longtime critic of the agency’s handling of the jobs data. He is proposing that they only release this data on a quarterly basis until the data has been clarified and has relevance. Then without large revisions they can start to report monthly data again.
- The US debt level reached US$37T a target not expected before 2030. Government spending increases and the Big Beautiful Bill’s tax cuts will just escalate the debt level and the funding requirements to meet the large fiscal deficit (expected over US$2T even after the tariff revenues) and debt renewals.
- The trade issues with China persist but have been deferred for 90 days to allow negotiations to make some progress if possible. In the meantime US imports from China are declining. Imports fell to US$28B in April the lowest since March 2020. Expectations are that newer data will show even lower numbers as China focuses on markets without tariffs on their goods.
- Canada’s economy is weakening quickly. Job losses of 41,000 were reported for July with the worst hit group being young people. China and Canada continue to have trade problems. China raised duties on Canadian canola to 75.8%. This is a $5B export business. China appears to be retaliating for Canada’s levies on China made EV’s, steel and aluminum.
I remain concerned that other Geopolitical Challenges could take place and be the ‘Black Swan’ to take the general stock markets to our downside targets.
Our expected downside targets are:
- Dow Jones Industrials Index 35,000 (now 44,836)
- S&P 500 4,800 now (now 6,456)
- NASDAQ 15,000 (now 21,697)
- S&P/TSX Energy Index 230 (now 265 – and down 7 points from last week)
- WTI US$57-59/b (now US$62.14/b)
We see WTI rising after the next dip and the potential issues that could drive prices quite high in coming years are:
- Global growth in late 2025 and from 2026 thereon should exceed global supplies.
- Lack of production growth from most of the non-OPEC world.
- US crude production levels are flat with last year as seen in this week’s EIA report.
If you want to see our Action Alert BUYS and our ongoing research on 37 companies in the energy sector then please sign up now for access to the Schachter Energy Research reports at https://bit.ly/2FRrp6k.Bullish pressure for crude prices comes from:
- US Tariffs on imports would raise prices for consumers and businesses. We now need to wait for upcoming data to see what occurs.
- Non-OPEC supplies are not growing and are much slower than initial expectations.
- Some OPEC members have not invested to increase their production so for many members any quota increase is meaningless.
Bearish pressure for crude comes from:
- Demand weakness in many European OECD economies.
- OPEC’s continuing additions to the market as they work to regain market share.
- US and China demand for crude and products is not growing and for some products are declining versus 2024 consumption.
- The US was an exporter of crude 3.58 Mb/d last week.
OPEC Monthly Report:
OPEC talks about material increases in production but has not been able to raise the volumes forecasted. Instead quota’s are being raised and volumes not so much.
Last month’s July 2025 report was released August 12th and showed that in July OPEC only lifted production by 263 Kb/d and not 411 Kb/d. This smaller increase was due to many countries not investing enough to raise production or were over quota and the new allocation just got them to where they were producing. Only Saudi Arabia and the UAE have real volumes to add. In the month of July, Saudi Arabia added 170 Kb/d and the UAE 109 Kb/d. Nigeria and Libya added modest volumes but these fluctuate materially due to war disruptions and theft of crude by locals. Iran produced 3.245 Mb/d for a decline of 12 Kb/d. Iraq 3.902 Mb/d for a decline of 51 Kb/d.
Non-OPEC producer Russia added 98 Kb/d to 9.12 Mb/d as China and India continued buying its cheaper oil. EU sanctions are not having any impact on Asian buyers who reject EU involvement in their internal affairs.
OPEC sees 2025 demand growth at 1.29 Mb/d or to 105.1 Mb/d. They see demand rising 1.38 Mb/d to 106.5 Mb/d in 2026 (prior forecast was for a raise of 1.28 Mb/d in 2026). We see 2025 consumption at 104.5 Mb/d and in 2026 at 105.5 M/d due to tariffs slowing global economic growth. Either forecast means higher crude prices next year. By 2050 OPEC sees demand at 123.0 Mb/d. That is too far out for us to contemplate.
Crude prices should start to lift in Q4/25 and exceed US$80/b in 2026 as global demand recovers.
EIA Weekly Oil Data:
The EIA data for last week was negative for the most part. Total Stocks rose 7.7 Mb to 1670.5 Mb, Commercial Stocks rose 3.0 Mb to 426.7 Mb while the SPR gained 0.2 Mb to 403.2 Mb. Motor Gasoline Stocks fell 0.8 Mb while Distillate Fuel inventories rose 0.7 Mb. Exports rose 259 Kb/d to 3.358 Mb/d as international buyers showed up to meet their tariff agreements to buy more US energy. Refinery Utilization fell 0.5% to 96.4% and is substantially above the level of 91.5% in 2024.
US Production rose 43 Kb/d to 13.33 Mb/d and is now up 27 Kb/d from last year’s level of 13.3 Mb/d. Low oil prices have made even some Tier 1 inventory uneconomic to drill and complete. It is clear now that the industry is cutting back spending due to insufficient returns from current low prices. Overall product demand rose 1.24 Mb/d to 21.4 Mb/d, as Other Oils demand rose 1.27 Mb/d to 5.83 Mb/d. Motor gasoline consumption fell 40 Kb/d to 9.00 Mb/d. Jet fuel consumption rose 124 Kb/d to 1.83 Mb/d. Cushing Inventories rose 0.1 Mb to 23.1 Mb. This is below the 2024 level of 28.8 Mb.
Overall 2025 US demand is up 0.8% to 20.22 Mb/d up from last year’s 20.07 Mb/d while Gasoline demand is down for the year by 0.5% to 8.78 Mb/d from last year’s 8.83 Mb/d.
In the coming weeks crude prices should continue declining towards US$60/b. If demand is weak during the latter stages of summer we could see a decline below US$60/b towards the US$57 – US$59/b area. We expect to get our next BUY signal at that time. In Q4/25 crude prices should lift to the US$72 – US$76/b level. Energy related stocks should be great performers as global demand picks up when winter starts.
EIA Weekly Natural Gas Data:
Last week there was an injection of 7 Bcf (data August 1st). This raised storage to 3.13 Tcf with the biggest increase coming in the Midwest area at up 10 Bcf but with a withdrawal from the Salt domes of 20 Bcf. NYMEX is now at US$2.82/mcf. In 2024 there was a 6 Bcf withdrawal and for the five-year average, injection was 23 Bcf. US Storage is now 4.2% below last year’s level of 3.27 Tcf and 5.9% above the five year average of 2.96 Tcf. US power usage is at a record high this year according to the EIA. Demand is forecast to grow materially as data centre demand and home and businesses use more natural gas in the coming years.
We recommend buying the very depressed natural gas stocks during periods of market weakness. Many natural gas stocks are very cheap now. We see much, much higher gas prices in Q4/25 as quite a number of new LNG plants come onstream over the next 12 months; one in Canada has now ramped up. More tankers are heading to Kitimat to load up in the coming weeks as the start-up problems are resolved.
In the US Venture Global has commenced production from its Phase 2 of its Plaquemines LNG export terminal in Louisiana. The plant pulled in 2.9 Bcf of feedgas as it filled cargos.
AECO is trading <C$0.65/mcf, due to a wet summer in western Canada, particularly Alberta, the slower than expected ramp up of LNG Canada Train 1 facilities, pipeline and facility maintenance holding back 1 Bcf/d of exports and full Canadian storage levels. In September the maintenance issues will be completed and full volumes will be able to be moved via pipelines. In addition, once regular operations are reached at LNG Canada then one export cargo can be loaded every two days. We look for AECO to rise to over C$3.00/mcf in Q4/25 and over C$3.50/mcf during winter 2025-2026. Operators can hedge all of their 2026 production now at >C$3.00/mcf. Higher prices should come as more LNG plants are planned for the BC coast. European natural gas prices are around US$15/mcf (versus US$12/mcf in Asia) as storage is depleting quite quickly. European inventories are low for this time of year’s stock rebuild. Rebuilding storage to the required 90% level by November 1st for winter 2025-2026 will be a big challenge across Europe and should keep import prices high.
Catch the Energy Conference:
Registration is Now Open – Join Industry Leaders at the Catch the Energy Conference!
Tickets are now on sale for the public. Become a subscriber and get two free tickets to the conference (tickets to the public are on sale at $119 per ticket each during the early bird window until September 20th (they then move to $179 each). To find out more go to www.catchtheenergyconference.
As usual SER subscribers will receive two complimentary tickets to the event. We look forward to seeing you there! Claim your two complimentary tickets now!
We are working away on getting our Presenters for this year’s conference. Below are those already signed up with confirmation forms in. We have met with other companies and will update this list as their confirmations come in. Last week we signed up Tantalus Systems Holding Inc. We have room for 45 companies and there are some slots still available. SER subscribers always get two complimentary tickets so please put the event in your calendar for October 18, 2025 if you can come to Calgary.
If you know of any companies with great stories and are public companies then have them reach out to me and we can meet them and see if the company would resonate with our attendees. We expect to have over 800 attendees this year versus just over 700 last year. My contact information is [email protected].
Thank you to our Sponsors, Exhibitors and Presenters. It is going to be a great lineup and largest attendance this year!
Baker Hughes Rig Data
In the data for the week ending August 8th, the US rig count saw a decrease of 1 rig to 539 rigs. US Rig activity is now 8.3% below the level of 588 rigs working last year. Of the total US rigs working last week, 411 were drilling for oil and this is 15.3% below last year’s level of 485 rigs working. The natural gas rig count is up 26.8% from last year’s 97 rigs, now at 123 rigs as wells are drilled to meet LNG export requirements. Companies remain financially disciplined despite the Trump administration edict to ‘drill baby drill’. WTI will need to exceed US$80/b for some time before drilling activity picks up materially for crude production to reach new all time highs. Natural gas needs to be over US$4.00 for NYMEX to incentivize natural gas drilling activity on a consistent basis. President Trump is in glee over the lower price of crude and lower gasoline prices (one of his election promises) however, productive capacity is shrinking.
In Canada, there was a 3 rig increase to 180 rigs. This rig activity rate is now down 17.1% compared to last year’s 217 rigs. There were 122 rigs drilling for oil last week down 17.0% from 147 last year. Drilling for natural gas was down 17.4% from 69 rigs to 57 rigs this week due to low and unprofitable natural gas prices.
Energy Stock Market:
The S&P/TSX Energy Index today is at 265 (down 7 points from last week) as crude prices weakened. I still expect a further >10% correction in the Index.
We like to BUY when stocks are cheap and being ignored. Bargains are clearly being seen now. Late July should provide the next great window to add to favourite positions at prices 10% lower than today. Investors should decide what you want your energy weighting to be for this long energy super cycle. Our BUY List includes ideas from the Pipeline/Infrastructure/
We are working on our next SER Monthly that should be out to paid SER subscribers August 28th. It will include the Q2/25 results of 15 companies. Tomorrow the start of the Q2/25 report season will be going to SER subscribers and includes the first 8 companies reviewed. If you are interested in independent analysis of the energy sector and to see our Balance of Evidence sections on the individual companies then become a subscriber. https://schachterenergyreport.
We are holding our Q3/25 quarterly webinar on Thursday August 28th. It will start at 7PM MT and last 90 minutes. We plan on highlighting the best ideas we see from our coverage universe so subscribers can focus on names that fit their portfolio needs. Another reason to become a subscriber.
Conclusion:
Longer term we remain very bullish. Our view remains that before the end of this decade we expect to see WTI prices exceeding the high in mid-2008 of US$147.27/b. During Q4/25 we expect to see WTI trade regularly over US$70/b as global growth and tight supplies set the stage for even higher prices in future years. This was above the consensus of low US$60’s/b or even US$50’s.
Down market days for energy stocks are the best days to build your positions for the lengthy energy super cycle we see lasting into the end of the decade. Subscribe now so you don’t miss it! https://schachterenergyreport.
We see energy having a very rewarding period for investors into year end from upcoming lows. Some of the BUY ideas we show on our SER Recommendation List could see upside of 50% or more into year end if our call of over US$75/b post war occurs.
Are you in the know?
Subscribers to Josef Schachter‘s Black Gold service receive:
- the Monthly Schachter Energy Report
- Monthly Interim Updates
- 90 Minute Quarterly Webinars
- Action BUY and SELL Alerts
- Performance Lists & Tables
- Archive Access
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