Daily Energy Market Update May 29,2025

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WTI is down 23 cents      July RB is down 0.68 cents       July ULSD is down 0.83 cents

Energies are lower now after rising overnight as a U.S. court blocked most of President Trump's tariffs. Also aiding prices was rising pressure for President Trump to impose sanctions against Russia. API data was positive for crude oil with a larger than forecast draw on supplies. Prices have likely turned negative now as U.S. jobless claims rose more than expected.

A U.S. trade court on Wednesday ruled that Trump overstepped his authority by imposing across-the-board duties on imports from U.S. trading partners. A three-judge panel of the U.S. Court of International Trade ruled that Trump overstepped his authority when he invoked the 1977 International Emergency Economic Powers Act to declare a national emergency and justify the sweeping tariffs. But, the ruling does leave in place other Trump tariffs, including those on foreign steel, aluminum and autos. But, some analysts said the relief may only be temporary given the Trump administration has said it will appeal. Goldman Sachs says that President Trump's tariff setback can be offset by other taxes. “For now, we expect the Trump administration will find other ways to impose tariffs.” (AP/Reuters/Bloomberg)

Some Republicans in Congress and White House advisers are urging U.S. President Donald Trump to finally embrace new sanctions on Moscow as frustration mounts over President Putin's military assault on Ukraine. But, President Trump sees sanctions as an escalation in tensions with Moscow that could derail hopes of a ceasefire in the three-year-old conflict. But Trump's frustration with Putin is genuine and increasingly severe, according to aides. They said he is giving sanctions serious consideration after Russia escalated its attacks in recent days. U.S. officials have prepared new economic sanctions against Russia, including banking and energy measures. They say that sanctions package is ready to implement based on Trump's order. (Reuters) As for President Putin, his conditions for ending the war in Ukraine include a demand that Western leaders pledge in writing to stop enlarging NATO eastwards and lift a chunk of sanctions on Russia, according to Russian sources with knowledge of the negotiations. This means formally ruling out membership to Ukraine, Georgia and Moldova and other former Soviet republics.  (Reuters)

The number of Americans filing new applications for unemployment benefits increased more than expected last week, while the jobless rate appeared to have picked up in May as labor market conditions continue to ease. Jobless claims rose to 240,000; a Reuters poll forecast the number at 230,000.

API                    Forecast          Actual
Crude Oil       +0.443/-0.6      -4.236
Gasoline        +0.224/-0.5       -0.528
Distillate        +0.104/+0.9     +1.295
Cushing              n/av             -0.342
Runs               +0.3/+1.3%       n/av

Chevron has terminated the oil production, service and procurement contracts it had to operate in Venezuela, delegating its joint-venture governance to its partner, state company PDVSA , according to Reuters sources. As for the loss of Venezuelan oil, Venezuela in April cancelled cargoes scheduled to Chevron, citing payment uncertainties related to U.S. sanctions. Chevron was exporting 290 MBPD of Venezuelan oil or over a third of the country's total before that. (Reuters)

Yesterday's OPEC and non-OPEC ministerial meeting ended with agreement to keep quotas in place through 2026. But, the meeting decided to create a new mechanism to define production baselines from 2027 on "aims to mitigate internal tensions and enhance the effectiveness of its production cut policies, which are crucial for maintaining stability in the global crude oil market,". The market reacted positively, as per WSJ commentary, interpreting the agreements as a sign of cohesion and control by the cartel. 

Libya's Benghazi-based government in the east has threatened to halt the country's oil production, citing recent attacks against state institutions in the capital Tripoli. The eastern government said it may be forced to "declare force majeure on oil fields and ports" or temporarily relocate NOC headquarters. Libya's crude production currently stands at just under 1.4 MMBPD. Previous blockades have seen output fall to as low as 100 MBPD. (Argus Media)

Asia's jet fuel exports to the U.S. West Coast are expected to hit at least a one-year high in May, according to ship tracking data and three trade sources, as refinery outages in California boosted prices and import demand. The exports for May are pegged at nearly 4.28 MMBBL, according to Kpler data. The exports were last at similar levels in February of 2024. The strength in U.S. jet fuel prices against Asia's opened the arbitrage window last month, traders said. The spread averaged more than $17 a barrel in April, Reuters calculations showed, while the average cost of chartering a medium-range vessel carrying 300,000 barrels of jet fuel for the roughly 30-day voyage was $5.50 a barrel, ship broking data showed, providing a good margin for Asian sellers. In the near term, strong jet fuel supply from China could depress benchmark prices in Singapore and keep arbitrage export trade to the U.S. open, one analyst says. China's jet fuel exports hit a 13-month high in April, official customs data showed. This caused South Korean refiners to redirect cargoes to the U.S. However, U.S. West Coast refinery use rates rose to a two-month high of 82.6% in the week ended on May 16, U.S. government data showed, potentially limiting import demand for June. 

Rystad Energy analysis sees a demand pick up during the summer.  "From May through August, the data points to a constructive, bullish bias with liquids demand set to outpace supply," Rystad Energy said. They expect demand growth outpacing supply growth by 600 to 700 MBPD. (Reuters)

Goldman Sachs has touted gold and oil as hedges against inflation in long-term portfolios, citing the appeal of bullion as a haven amid concerns over US institutional credibility and crude’s ability to protect against supply shocks. “During any 12-month period when real returns were negative for both stocks and bonds, either oil or gold have delivered positive real returns.”, Goldman writes. (Bloomberg)

July RB support lies at 2.0431-2.0453 and then at 2.0255-2.0261. Resistance at 2.1011-2.1020 was almost tested with the overnight high of 2.0975. The 50 day moving average on the July daily chart was touched. That average intersects at 2.0850.

July ULSD tested its daily chart's 50 day moving average overnight. That average lies at 2.0893. Resistance basis the July daily chart comes in at 2.1083-2.1096. Support lies at 2.0478, which is the low of the prior 4 sessions, where we see a tight range of lows. Below that support comes in at 2.0188-2.0195.

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