Daily Energy Market Update 6-19-2025

Liquidity’s Daily Market Overview

Energies are higher, led by the distillates, as President Trump weighs whether to possibly strike Iran. Israel and Iran continue to strike at each other. 

The conflict entered its seventh day on Thursday after Israel struck a key Iranian nuclear site and Iranian missiles hit an Israeli hospital. (Reuters) Bloomberg News said that some senior U.S. officials were preparing for a possible weekend strike. President Trump told reporters on Wednesday that he had yet to decide whether the U.S. will join Israel in its attacks on Iran. There was a development on the diplomatic front, however, as Iran's state media reported that its foreign minister will meet in Geneva with European counterparts on Friday. (Market Watch)

The DOE data corroborated the API data for the crude inventory draw as net crude imports fell by 1.747 MMBPD to a very small total of 1.143 MMBPD. Crude exports rose by 1.075 MMBPD and Crude imports fell by 672 MBPD. Thus, the large draw in crude supplies is substantiated even as crude inputs to refineries fell by 364 MBPD to 16.862 MMBPD. Crude supplies are seen at -10% versus the 5 year average as per the DOE. The deficit of  -48 MMBBL versus the 5 year average is at a multi year high. (Celsius Energy)  Demand for gasoline and distillate rose on the week, but lagged the prior 2 years. Gasoline demand rose by 129 MBPD to 9.299 MMBPD. But this is still below the prior 2 years figures by 75 to 85 MBPD. Distillate demand rose on the week by 370 MBPD to 3.746 MMBPD. But this is less than the prior 2 years demand by about 230 MBPD. Distillate inventories are 17% below the 5 year average, as per the DOE.

Contrary to the news seen yesterday regarding Iran's oil exports having fallen considerably, early data from TankerTrackers.com Inc. show that Iran increased its exports significantly since the attacks began, and there has been no major disruption to the strait. (Bloomberg)

The cost of shipping crude from the Middle East to China is more than 50% higher since the attacks began.  (Bloomberg)

The Federal Reserve kept interest rates unchanged in their meeting this week, but they removed one of their projected 2026 rate cuts. They thus see 3 rate cuts by the end of 2026. They left their March plan for 2 rate cuts this year intact. Fed officials now see slower GDP growth, higher unemployment and more inflation this year versus the previous projection. (WSJ)

Alberta wildfire risk is low in most energy-producing areas of the province,  according to Alberta Wildfire cited by Bloomberg.

Goldman Sachs said on Wednesday, that it estimates a geopolitical risk premium of around $10 per barrel. Goldman said the $10/bbl premium appears justified in light of its lower Iran supply scenario where Brent spikes just above $90, and tail scenarios where broad regional oil production or shipping is negatively affected. Goldman had prior forecast that Brent prices would be $60 in Q4 of this year. Separately, Barclays said on Wednesday that if Iranian exports are reduced by half, crude prices could rise to $85 per barrel and that prices could move past $100 in the “worst-case” scenario of a wider conflagration.(Reuters)

Bullish options are fetching their biggest premiums in more than a decade, and volatility has surged to a three-year high. (Bloomberg) In WTI options on Wednesday, the December $100/$110 call spread traded in a 1 versus 1.5 ratio, with the $100 call being sold and 1.5 of the $110 calls being bought for a cost of 9 cents to the buyer of the higher price strike.

Retail prices for gasoline and diesel as per AAA data have risen to their best price since early April. Gasoline on a national average is priced at $3.205, while diesel is averaging $3.627.

The CME will halt trading today/Thursday from 2:30 to 6 PM EST.

Energy Market Technicals

Momentum is overbought for the energies, especially for the ULSD.

WTI August futures have support at 71.33-71.39. Resistance lies at the recent high of 75.50. Above that resistance is seen at 78.46-78.47 via the weekly chart.

Natural Gas Market Overview

Natural Gas--NG is up 1.1 cents
NG is near unchanged as the tone remains supportive with very hot weather set to invade the Eastern portion of the U.S. in the coming days. The spot futures have tested $4.00 yesterday and today. Currently, gas demand from power plants is at its highest since February. (Bloomberg)

The EIA gas storage data showed a build of 95 BCF. This raised total storage to 2.802 TCF. This is +162 BCF/+6.14% versus the 5 year average, but -233 BCF/-7.68% versus last year's storage level.

Heat advisories are up for parts of the Northeast, including Boston, for today while the National Weather Service has just placed a much larger chunk of the Midwest, including the entire state of Iowa, under an Excessive Heat Watch for an extended period of highs in the 90s to 100s beginning this weekend.

The Weather Channel said Wednesday that over the next several days, we're forecasting highs in the 90s to spread over much of the country east of the Rockies. Dozens of locations, especially in the Northeast, will be within striking distance of daily record highs early next week. NY could see a high of 100 degrees next week, which is a temperature not seen since July, 2012. More oppressive humidity will accompany the heat wave late this week into next week.

Yesterday saw the next day Henry Hub cash rise to its best value since mid-April. The price for the next day cash gas seen early on Wednesday morning was $3.60. The cash futures differential thus narrowed to about 37 cents, down from Monday's differential of 80 to 82 cents.

In the NG options on the CME on Wednesday, the October/January minus $1.00 call traded versus the minus 80 cent call in a spread that went in a 1x2 ratio--with the buyer of the -$1.00 call paying 1.3 cents versus selling twice as many of the -80 cent calls. Also in the NG options on the CME, the October $3.85 puts were purchased at a cost of 38.3 cents with delta October futures buys at a price of $4.09.

Technically momentum remains positive for the NG basis the DC chart and is not yet overbought. Upside resistance comes in at $4.045-4.050 and then at 4.141-4.148. Support lies at 3.860-3.864.

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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.

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