Newsletter No. 177
Good afternoon,
U.S. energy demand remained firmly in focus this week as data center expansion, record electricity use and tight refined-fuel inventories highlighted the need for reliable oil, natural gas and power infrastructure.
Major industry developments also pointed to renewed confidence in traditional energy. Williams announced a multibillion-dollar midstream acquisition tied to Haynesville growth, BP moved to refocus its portfolio on oil and gas, and U.S. drilling activity continued to strengthen.
In this week’s issue of The Upside, we break down what these developments could mean for domestic production, energy security and future investment opportunities. We also feature a new episode of The Jay Young Show with guest Josef Schachter, discussing whether oil could reach $200, the energy supercycle and what investors should watch.
This Week's Headlines
Oil and Gas News
- Tight Fuel Supplies Reinforce the Need for U.S. Oil Investment
- BP Refocuses Capital on Higher-Return Oil and Gas Assets
- U.S. Drilling Activity Gains Momentum
- China’s Record Power Demand Could Support Global Natural Gas Markets
What's Happening at King
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Iran, the Energy Supercycle & What Investors Should Watch with Josef Schachter
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Oil & Gas Rundown LIVE! If you Missed It
Energy Market Perspective
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AI Growth Strengthens the Case for U.S. Natural Gas Production and Energy Investment
Move to Watch
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Williams Expands Its Haynesville-to-Gulf Coast Gas Network
Oil and Gas News
Tight Fuel Supplies Reinforce the Need for U.S. Oil Investment
The latest EIA petroleum report delivered a mixed headline but an encouraging underlying signal for the U.S. oil and gas industry. Commercial crude inventories increased by approximately 2.5 million barrels, yet most of the build occurred at Cushing and in the Midwest. Gulf Coast crude inventories declined, showing that supply conditions remain uneven across the country.
The stronger demand signal came from refined fuels. Gasoline inventories fell by 1.6 million barrels, while distillate stocks declined by nearly 3.5 million barrels. Diesel and other distillates are essential to trucking, agriculture, manufacturing and global commerce, so a large draw indicates continued consumption and limited excess supply.
The report also showed a 2.8-million-barrel decline in the Strategic Petroleum Reserve. With emergency inventories still being used and commercial fuel supplies remaining below year-ago levels, the market has less cushion than the crude-build headline might suggest.
Overall, geopolitical tensions may be adding volatility and a risk premium to prices, but the physical data show that underlying demand remains real. The United States needs sustained investment in oil production, drilling, refining, pipelines and storage to maintain reliable domestic supplies, support exports and respond when global disruptions increase demand for American energy.
BP Refocuses Capital on Higher-Return Oil and Gas Assets
BP plans to sell its U.S. biogas business, Archaea Energy, only three years after acquiring it for $4.1 billion. The renewable natural gas unit underperformed expectations, prompting BP to include it in a broader restructuring aimed at reducing debt, simplifying operations and concentrating investment on more profitable upstream and downstream businesses.
The sale reflects BP’s renewed emphasis on oil, natural gas and refining as stronger energy prices and market volatility helped lift second-quarter underlying profit to $5.73 billion. The company is targeting roughly $20 billion in asset sales by the end of 2027 as it redirects capital toward assets with the greatest potential to produce competitive returns and long-term shareholder value.
U.S. Drilling Activity Gains Momentum
U.S. oil and gas producers added rigs for a fifth consecutive week, lifting the total count to 558, its highest level since June 2025. Oil-directed rigs rose by 10 to 425, the largest weekly increase since February 2023, while Texas added 10 rigs to reach 255.
The increase suggests producers are responding to stronger 2026 oil-price expectations and renewed confidence in future demand. Although the total rig count remains slightly below last year, the EIA expects U.S. crude production to rise to 13.7 million barrels per day and natural gas output to reach 110.6 billion cubic feet per day in 2026.
China’s Record Power Demand Could Support Global Natural Gas Markets
Electricity demand across northern, northeastern and eastern China reached record highs this week as extreme heat increased air-conditioning use. No blackouts have been reported, with grid operators redirecting baseload power to meet demand.
China plans to invest $574 billion in its power grid through 2030 while expanding renewable energy, battery storage and coal-fired generation. The surge is potentially positive for U.S. natural gas producers and LNG exporters because sustained electricity growth could increase China’s need for reliable fuel imports.
Happening at King
Iran, the Energy Supercycle & What Investors Should Watch with Josef Schachter
In the most recent episode of The Jay Young Show, my co-host Jordan Soto and I welcome veteran energy analyst Josef Schachter, founder and editor of the Schachter Energy Report, for a wide-ranging discussion about oil prices, natural gas, geopolitical risk and the long-term investment outlook for conventional energy.
Josef explains why North America remains well supplied while global oil and refined-product markets face increasing pressure. He also breaks down the potential impact of continued conflict involving Iran, the Strait of Hormuz, China, Russia and the Middle East.
Watch on Rumble and YouTube (@JayRYoungOfficial), or listen wherever you get your podcasts
Don't Miss this Oil & Gas Rundown LIVE!
Join us live every Wednesday at 2 p.m. CT for Oil & Gas Rundown LIVE, where we break down the latest headlines, market moves, and industry developments shaping oil and gas in real time. It’s a chance to stay current on up-to-the-minute energy news, hear sharp insights on what matters most, and get a clearer view of where the market may be headed. Whether you follow the industry closely or just want a smart, timely update each week, this is a conversation you won’t want to miss.
YouTube: @JayRYoungOfficial
LinkedIn: jayr-young
Energy Market Perspective
AI Growth Strengthens the Case for U.S. Natural Gas Production and Energy Investment
Rapid data center development is driving a major increase in U.S. electricity demand as the country competes with China for leadership in artificial intelligence. Developers are increasingly turning to energy-producing regions such as the Permian Basin, where abundant natural gas, existing infrastructure and a supportive business environment can help provide reliable power.
At the same time, concerns about electricity costs, water use, land development and grid reliability are creating political and regulatory challenges. To reduce pressure on consumers and the existing grid, data center operators are increasingly expected to fund dedicated generation, including behind-the-meter natural gas facilities such as Chevron and Microsoft’s planned 2.67-gigawatt Texas project.
The trend reinforces the importance of continued investment in U.S. oil and gas production, pipelines, power generation and related infrastructure. Natural gas, in particular, can provide the dependable, scalable electricity needed to support AI growth while renewable generation, storage and transmission systems continue to expand. Delays in permitting or underinvestment in domestic energy could constrain data center development, raise reliability concerns and weaken U.S. technological competitiveness.
Learn More about how King Operating Corporation is helping develop the energy America needs for the future.
Move to Watch
Williams Expands Its Haynesville-to-Gulf Coast Gas Network
Williams Cos. agreed to acquire Momentum Midstream for up to $5.5 billion, strengthening its position in the western Haynesville and East Texas’ emerging Shelby Trough. The deal adds more than 4,000 miles of pipelines and supports two new projects that could initially move 3 Bcf/d of natural gas toward Louisiana LNG terminals, power plants and the Transco system.
Williams expects Haynesville production and U.S. LNG export capacity to grow significantly over the next decade, increasing demand for Gulf Coast infrastructure. The acquisition also helped raise the company’s targeted adjusted EBITDA growth rate through 2030 to at least 11%, reinforcing the long-term outlook for natural gas producers and midstream operators serving LNG, power generation and data-center demand.
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All the best,
Jay
