Week in Review – Crude Holds Weekly Gain, EIA Projects 2026 Output Decline

Crude prices saw an overall week-over-week gain despite daily volatility throughout the week and a $0.61 drop this morning. The Federal Reserve's decision to cut interest rates for the first time this year, aimed at softening labor market concerns, initially set expectations of stronger consumption. However, the broader macroeconomic supply and demand balance kept markets on edge.

The U.S. Energy Information Administration (EIA) released its September Short-Term Energy Outlook, projecting that crude oil production will ease in 2026 after consecutive record highs. Output is expected to average 13.44 Mbpd in 2025 before dipping slightly to 13.30 Mbpd in 2026, compared to 13.23 Mbpd in 2024. The Permian Basin remains the backbone of growth, though output is forecast to plateau, while Gulf of Mexico and Alaskan production should see incremental gains.

The EIA noted that falling oil prices and relatively stronger natural gas pricing will likely shift drilling activity toward gas-rich regions in 2026. This suggests that while crude output may pull back modestly, natural gas supply will remain a stabilizing factor.

U.S. distillate stockpiles rose by 4 million barrels last week, well above forecasts, signaling weaker industrial and freight activity. Gasoline premiums to WTI also remain elevated, about $7 per barrel higher than this time last year, as unplanned refinery outages overseas constrained global supply. Still, domestic driving demand has slowed post-summer, keeping markets cautious.

The U.S. Environmental Protection Agency (EPA) proposed new rules for reallocating waived biofuel blending obligations under the Small Refinery Exemption (SRE) program. Options range from 50% to 100% reallocation, with comments also invited on alternatives from 25% to none.

Biofuel groups are pushing for full reallocation to protect demand for products like corn-based ethanol, while refiners warn that higher requirements could raise costs. The proposal covers about 2.18 billion RINs exempted from 2023 to 2025. Industry officials criticized the move as offering "little clarity," with a 45-day comment period expected to be decisive. The final outcome could shape both compliance costs and renewable fuel demand in the coming years.

Prices in Review

Crude prices opened at $62.97 on Monday and trended higher midweek, peaking at $64.59 on Wednesday. The gains were short-lived, as prices eased to $63.99 on Thursday and $63.59 on Friday. Compared to Monday's open, crude added $0.62, a weekly increase of 0.98%.

Diesel prices opened at $2.2981 on Monday and climbed steadily through midweek, reaching a weekly high of $2.3916 on Wednesday. Prices then eased slightly, settling at $2.3491 on Thursday and $2.3422 on Friday. Overall, diesel gained $0.0441 for the week, an increase of 1.92% from Monday's open.

Gasoline prices opened at $1.9950 on Monday and trended upward through midweek, hitting a weekly high of $2.0373 on Wednesday. Prices then eased, slipping to $2.0228 on Thursday and $2.0145 on Friday. For the week, gasoline rose $0.0195, an overall increase of 0.98% from Monday's open.