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First Look - Oil softens ahead of inventory data; natural gas moves back above $3.50

July 16, 2025 | Narciso Cano

Oil slips ahead of US inventory data
- The WTI prompt-month contract fell $0.65 to $65.87/Bbl Wednesday morning (7:45 AM CT)
- The market is balancing near-term tightness against a looming surplus
- The American Petroleum Institute reported an 800 MBbl/d build last week, with official government data due later Wednesday
- According to Morgan Stanely, global oil inventories have swollen at a rapid rate in recent months
  - Most of the inventory build has occurred in the Asia-Pacific, allowing key benchmark pricing hubs to remain tight, with only 10% of the build occurring in OECD countries
  - Once summer driving season ends, demand could weaken while supply remains strong, potentially revealing the global surplus
  - Morgan Stanley expects a 165 MMBbl OECD stock build over 12 months, supporting their $65/Bbl price view

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Natural gas prices are trading higher for a third day
- The August Henry Hub contract has moved back above $3.50/MMbtu in recent days, as expectations of increased power demand support prices
- LNG feedgas volumes moved lower to 15.7 Bcf/d, as Elba LNG’s flows fell to zero from about 400 MMcf/d
  - This is the first time in several years that the small east coast facility has seen a significant outage
Blackstone to invest $25 billion in data centers and power plants (PGJ)
- The firm aims to partner with an electric utility to build natural gas power generation facilities in Pennsylvania
- Co-located data centers can cut down on wait times for power caused by supply chain constraints
- This comes as President Trump unveiled $90 billion in energy and AI investments for Pennsylvania from private companies

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