Daily Energy Market Update April 29, 2025

April 29, 2025

WTI is down 5 cents       June RB is up 0.24 cents     June ULSD is up 0.46 cents

Crude prices are lower with many reasons cited. One is progress in Ukraine peace talks that have "fueled expectations of a potential surge in supply." (Platts) Additionally, yesterday's weak U.S. manufacturing data is weighing. Also, the uncertainty of demand  due to tariffs and the prospect for increased OPEC+ production are negative factors.

Energies fell Monday partially under the weight of disappointing U.S. economic data. "The Dallas Fed Manufacturing Survey General Business Activity Index fell -19.5 pts to -35.8 in April, the lowest since May 2020." (DallasFed.org) This follows the University  of Michigan consumer sentiment seen Friday which fell to 52.2 from 57 in March. The 32% fall in the 3 months since January is the most since the 1990 recession. Higher prices coupled with a weaker labor market led to the drop. (WSJ)

China's foreign ministry on Tuesday released a video saying it won't capitulate in a message as much to other trading partners as to the U.S. (Marketwatch) "The market continues to worry about the obvious; that a drawn out trade war will sap demand, adding  downward pressure on prices in search for a new equilibrium where weaker demand is balanced by lower supply from high-cost producers, especially in the U.S.", as per one analyst cited in Reuters.

WTI Calendar Spread Call Strips Trade for a Second Day. Bloomberg reports WTI calendar spread options continued to trade actively Monday, betting on a return to backwardation for 2026 contracts and extending Friday’s jump in positioning. The Jan./Feb. 2026  through Dec. 2026/Jan. 2027 flat/$0.75 1x2 ratio call spreads traded 1,000 lots per month for 3 cents. This continues the trading pattern seen Friday when 3,000 of the ratio spreads traded per month at the same price, Bloomberg says. The Jan. 2026-Jan. 2027  futures spread was -$0.85/bbl Monday, or ~-$0.07/month, from a price of $2.31 on April 2nd. We also saw size volume having traded on Monday in the December 2025/March 2026  $0.50 /$1.00 put spread for a cost of 6 cents. Thus, this options trade buyer is betting  on a contango situation in the first quarter of 2026. This is an opposite stance from the abundance of ratio call spreads in Calendar 2026 that Bloomberg wrote about. We also saw the 4th quarter 2025 $0.25/$0.75 put spread traded for a cost of 8 cents on the  CME.

Barclays on Monday cut its 2025 Brent crude price forecast by $4 to $70 a barrel, citing elevated trade tensions and a pivot in production strategy by the OPEC+ group as drivers of a 1 million barrel per day oil supply surplus this year. (Reuters)Technicals

Rystad Energy cut their U.S. crude supply growth estimate for 2025 in half. They now see supply growing by 150 MBPD. They cited lower commodity prices and higher costs due to President Trump's trade war. Rystad adds that the decline is seen most in the Permian  Basin, as "other basins already are in maintenance mode,”.  (Bloomberg)

WTI is headed for a monthly slump of more than 13%, the biggest since 2021, after touching a four-year low. (Bloomberg) WTI momentum basis the DC chart is turning neutral. The June product charts still have positive momentum, but the stepladder pattern seen  24 hours ago has been broken with today's pullback.

WTI spot futures see support at 60.44-60.45 and then at 58.95. Resistance lies at 63.31-63.34.

June RB support comes in at 2.0389-2.0391. Resistance was tested at the overnight high at the 2.0963-2.0974 level. Above that resistance lies at yesterday's high at 2.1227-2.1241.

ULSD for June sees support at the overnight low area at 2.0720-2.0732. Below that support lies at 2.0572-2.0586. Resistance comes in at 2.1235-2.1249 and then at 2.1355.

NG futures are higher again today with bullish momentum having been revived. Various reasons have been cited for the strong up move seen the past 24 hours. Production growth stagnating, coupled with some higher demand forecasts. We see some modest heat building  in Texas on the back end of the 14 day forecast. Some also have cited short covering for the rally.

NG prices "surged" Monday with various commentaries reading as follows :""Front-month and summer futures pricing may have overshot to the downside, given that production growth is still tentative and storage inventories remain well below last year's levels",  as per one advisor quoted in Dow Jones. Reuters commentary cited higher than previously forecast demand for the NG rally and adds : " Despite the price jump, the front-month remained in technically oversold territory for an eighth day in a row for the first  time since February 2024." " Fund short covering ahead of the May natural gas futures contract expiration on Monday pushed natural gas prices higher." read a comment seen.

The Waha natural gas price was up 53 cents/MMBtu Monday to $1.31/MMBtu, supported by weaker Permian output and stronger demand. Production from the Permian Basin was 20.1 BCF/d, down around 0.8% on the day. This compares to a 30-day average of 20.28 BCF/d.  At the same time, U.S. Gulf Coast end user demand yesterday was at 15.58 BCF/d, up by around 0.49 BCF/d. That demand was 1.05 BCF/d above the 30-day average. (Bloomberg data) Today, BP's CEO has said that they will moderate Permian activity if oil prices stay low. (Bloomberg) This is potentially bullish for NG, given the associated gas that comes from oil production in that region.

Wind generation was possibly set to hit a new record high with output as of 4:15 ET on Monday topping 1600 GWH, on pace to eclipse the record of 2102 GWh from February 2024.

Early estimates seen for this week's EIA gas storage data are calling for a build of 108 to 115 BCF. This compares to last year's build of 64 BCF and the 5 year average build of 58 BCF. Thus, a build as estimated would flip the deficit to the 5 year average  to a surplus.

Chinese LNG imports in April are seen down 20% versus a year ago level. As a result, Beijing is set to see its first annual decline in LNG imports since 2022. China has re-exported more than 280,000 tons of liquefied natural gas so far in April, the highest  volume ever in a single month, according to ship-tracking data compiled by Bloomberg. That is equivalent to 7.7% of total imports for the month, the data shows. The high volume of re-exports is likely spurred by weak domestic demand amid comfortably full winter  inventories. The nation may also benefit from higher prices abroad. (seeking alpha)

TTF prices have fallen again to a fresh low today. The expiring May TTF futures has fallen to a low of Euro 31.105/Mwh, equal to $10.41/MMbtu.  “LNG imports to Northwest Europe have picked up again… at a level we believe is more than sufficient to balance the  European market and refill inventories,” analysts at DNB Markets said. "LNG imports must continue to be high going forward, as it is very much needed for Europe to rebuild inventories before the next heating season.”, DNB adds. Demand in Europe is also expected  to weaken further this week due to above-average temperatures, as per WSJ commentary.  Also, demand in Asia is expected to weaken further this week due to above-average temperatures, which could lead to more LNG being offered from that region. (Investing.com)

In as much as many spoke of Monday's rally in NG futures being a function of short covering, the open interest in NG futures on the CME fell by only 5,721 contracts. Thus, we believe that some of the rally was also about investors adding length, not just covering  prior sales.

The momentum basis for NG has turned positive and there is a rollover gap on the DC chart due to the 16 plus cents that the June contract carried over the expired May futures. The gap on the DC chart goes down to 3.187. Resistance for the June contract at 3.388-3.391  has been pierced. Next resistance above lies at 3.454-3.458. Support is seen at the overnight low at 3.306-3.308. Below that support lies at 3.230-3.235.