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- Daily Energy Market Update May 26,2025
WTI is down 11 cents July RB is down 0.29 cents July ULSD is down 1.13 cents/
Overview
Energies are lower now. Crude oil traded higher overnight as President Trump said that he would delay imposing a 50% tariff on the EU from June 1 to July 9. Additionally, geopolitical news was seen as supporting crude oil.
President Trump said that Russian President Putin had "gone absolutely crazy" by unleashing the largest aerial attack of the war on Ukraine. President Trump was weighing new sanctions on Moscow. Also there seems to be limited progress in nuclear talks between the US & Iran. (Reuters)
President Trump said Sunday that he has agreed to delay a 50% tariff on European Union imports until July 9. In a call with the EU Commission President asked "Could we move it from June 1 to July 9? I agreed to do that.”, President Trump said. (CNN)
Iran would be able to survive if negotiations with the U.S. over its nuclear programme fail to secure a deal, Iran's President said on Monday, after President Trump described weekend talks with Tehran as "very good". While signs of some limited progress emerged, there are many points of disagreement that are hard to breach, notably the issue of Iran's uranium enrichment.(Reuters)
Pemex crude oil exports fell in April by 13.7 % from March to 648 MBPD. Part of the drop is due to the company's plan to send more crude to their local refineries. (Reuters) Yet, Bloomberg data shows refining usage fell in April. Pemex’s seven Mexican refineries processed less crude in April, failing to sustain the high levels seen in March, Bloomberg said. Refineries processed 929.6 MBPD in April, down 8.4% on the previous month and 2.2% lower on the year.
The Baker Hughes oil rig count issued Friday showed a decrease of 8 units, falling to its lowest level since November of 2021. Bank of America analysis added : "with shale productivity gains slowing, "total U.S. crude oil supply could peak as soon as the next 24 months." They cited not only the lower price for the drop in the rig count, but also the rising wellhead oil breakevens. (WSJ)
Money managers reduced their holdings in WTI futures /options on ICE/CME combined by 12,816 contracts in the week ended Tuesday May 20. This was mostly a function of longs having been sold on the CME. RB net length rose by 2,076 contracts. Most notable in the CFTC Commitment of Traders Report was the fact that money managers turned net long ULSD futures/options from being net short. By covering 17,705 short positions, money managers turned net long 2,703 contracts. Speculators increased their net long in ICE Brent by 12,185 lots over the last reporting week, as per ING reporting. ING added : " This might be due to fading hopes of an Iranian nuclear deal. "
U.S. crude oil storage demand has surged in recent weeks to levels similar to the COVID-19 pandemic, according to data from storage broker The Tank Tiger, as traders brace for a flood of increased supply in coming months from OPEC+. Crude oil storage demand on The Tank Tiger's platform has almost doubled from May to 3 MMBBL for June. Buyers have made inquiries for storage tanks across most U.S. trading hubs, including those in the country's Midwest and along its Gulf Coast. (Reuters)
This week much of the focus will be on the OPEC+ meeting to be held next Sunday June 1. It is widely believed that the group will agree to increase output by another 411k b/d in July. This should keep the market well supplied over the second half of this year, ING presumes.
Technicals
Momentum remains negative for the energies
WTI spot futures see support at 60.02-60.12 and then at 58.95. Resistance lies at 62.06-62.07, which was tested with the overnight high of 62.14. Above that resistance is seen at 62.91-62.98.
July RB support lies at 2.0637-2.0644 and then at 2.0453-2.0479. Resistance comes in at 2.1011-2.1020 and then at 2.1193-2.1199. The 50 day moving average for the July RB intersects at 2.0889.
ULSD July futures see support at 2.0505-2.0527 and then at 2.0392-2.0405. Resistance comes in at 2.0914-2.0915, which was tested with a high last night of 2.0937. Next resistance above that is seen at 2.1083-2.1096. The 50 day moving average for July ULSD lies at 2.0925.
Natural Gas - July is down 7.2 cents
After gapping higher overnight, natural gas prices are now lower as weather demand is low in much of the U.S. amid continued strong production and the recent large injections into storage.
Lower-48 state dry gas production Friday was 107.0 BCF/day (+4.7% y/y), according to Bloomberg data.
The Baker Hughes gas rig count issued Friday showed a decrease of 2 units.
Money managers raised their net short positioning in futures/options on the CME by 18,158 contracts to a total of 56,807 contracts in the week ended Tuesday May 20, as per Friday's CFTC report. This was achieved by new shorts being added.
The June LN/NG options expire Tuesday. The following strikes in the June expiring options have the largest open interest on the CME as of Friday's close. In the calls, the $3.25 strike has 7,540 contracts, while the $3.50 strike has 25,169 contracts outstanding. On the put side, the $3.50 strike has 24,352 contracts open, the $3.25 strike has 23,054 contracts open and the $3.00 strike has 40,178 contracts outstanding.
One notable change in LN/NG options open interest from Friday seen on the CME was in the 1 month June/July calendar spread minus 40 cent put. The option traded 1.9 and 2.0 cents as positions in the option were closed. This coincides with the underlying futures spread falling to its widest discount near minus 40 cents. Reuters commentary cites forecasts for hotter weather in July and August as causing the spread to widen. We would add that the recent large storage injections have likely weighed on the front end of the curve.
Investment firm Bernstein is forecasting the onset of a U.S. natural gas super cycle, driven by a combination of robust demand growth and constrained supply. Bernstein projects that total U.S. gas demand will rise from approximately 120 BCF/d in 2024 to about 148 BCF/d by 2030. The key drivers of this growth are an expected surge in LNG exports and a sharp increase in power demand, particularly from data centers. LNG exports are forecast to grow by 10 BCF/d through the end of the decade. Power demand is expected to add another 8 BCF/d, continuing a linear trend observed over the past two years. Bernstein highlights that over 70% of U.S. gas supply does not interact with price due to either being associated with oil drilling or limited by infrastructure constraints. Their modeling is suggesting a long-term equilibrium price around $5 per million cubic feet. (Investing.com)
Gas prices in the Western US, already capped by extraordinarily high storage inventories, could face more downward pressure this summer as melting snowpack weighs on the region’s power-sector gas demand. (Energy Intelligence)
On Friday, LSEG forecast average gas demand in the Lower 48, including exports, will drop from 99.5 BCF/d "this" week to 96.1 BCF/d "next" week before rising to 97.4 BCF/d in two weeks. The forecasts for "this" and "next" week were up a total of 1.7 BCF/d from the forecasts seen Tuesday.
Technically July NG futures have positive momentum. Resistance is seen at 3.754-3.758 and then at 3.831-3.837. The overnight high of 3.807 was seen at the opening of the session last night. But, intraday charting shows prices basically were capped overnight near 3.76. Support on the July daily chart comes in at 3.570-3.574 and then at 3.491-3.495.
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Disclaimer
This article and its contents are provided for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any commodity, futures contract, option contract, or other transaction. Although any statements of fact have been obtained from and are based on sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed.
Commodity trading involves risks, and you should fully understand those risks prior to trading. Liquidity Energy LLC and its affiliates assume no liability for the use of any information contained herein. Neither the information nor any opinion expressed shall be construed as an offer to buy or sell any futures or options on futures contracts. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Any opinions expressed herein are subject to change without notice, are that of the individual, and not necessarily the opinion of Liquidity Energy LLC
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