Daily Energy Market Update 6-23-2025

Liquidity’s Daily Market Overview

Energies are lower now as the immediate threat of a closure of the Straits of Hormuz and hence shipping disruptions has been discounted. Prices saw a sharp rise overnight at the outset of trading due to US strikes against Iran.

According to state media, Iran’s parliament voted to close the Strait of Hormuz. The final decision on whether to shut the vital waterway rests with Iran’s Supreme National Security Council and Supreme Leader. Other possible retaliatory moves from Iran could include supporting Yemen’s Houthi rebels in renewed attacks on commercial shipping.  (Yahoo Finance) The danger to vessels in the region’s waters was underscored when two oil tankers crashed into each other. Almost 1,000 ships a day are having their GPS signals jammed, creating growing safety risks. The MICA Center, a French liaison between the military and commercial shipping, said the tanker crash was likely “aggravated” by jamming.   (Bloomberg)

But, much has been written about Iran not wanting to stop flows through the Straits of Hormuz as so much of the oil from the region ends up going to Asia rather than the U.S. The thought being that a loss of flow would upset China a lot being much of Iran's oil heads there. China imported 5.4 MMBPD through the strait in the first three months of 2025, according to the EIA’s estimates. That’s equivalent to about half of China’s daily average crude imports in the first quarter of the year, according to CNN’s calculation based on Chinese customs data. "Price action this morning suggests that the market doesn’t believe (at least not yet) that flows through Hormuz will be blocked.", as per an ING comment. But, "At least two supertankers made U-turns at the Strait of Hormuz following U.S. military strikes on Iran, shiptracking data shows." Singapore-based Sentosa Shipbrokers said that over the past week, empty tankers entering the Gulf are down 32% while loaded tanker departures are down 27% from early May levels. (Reuters)

On Saturday, the U.S. carried out a strike against 3 Iranian nuclear facilities. President Trump alluded to the possibility of regime change in Iran in a social media post Sunday. The US bombing likely caused “very significant damage” to the underground parts of Iran’s Fordow nuclear site buried deep in a mountain, according to the head of the International Atomic Energy Agency (IAEA), the United Nations’ nuclear watchdog. (CNN)  Israel carried out fresh strikes on Iran on Monday including on capital Tehran, and Iran's nuclear facility of Fordow which was also a target of the U.S. attack. (Reuters) Several waves of Iranian missile attacks were reported in Israel. (CNN)

Iran’s foreign minister is in Moscow today and said he will discuss Iran and Russia’s “common threats” in an upcoming meeting with President Vladimir Putin, according to Iranian state media. (CNN)

The options markets in oil are easing back on their bullish view from that seen last week. The second month Brent 2025 calendar delta call-put volatility spread is today holding around 16.8%, down from around 21.2% on Friday, while the WTI second month spread is 11.9%, down from 14.9% on Friday. The longer dated December 2025 call-put skew has fallen, with the Brent spread at a narrow 0.3% (from a high of 2.1% on Friday) and WTI flipping to a put skew of about 0.8% (from a 0.2% call skew on Friday). (Market News)

 ICE data on Friday showed fund net long Brent positioning rose to the highest since the start of April and Gasoil the highest since July 2024. (Market News)

Due to the heightened supply risk from the Mideast, ING has altered their previously forecasted Brent average of $62/bbl in the third quarter. We've increased this to $70/bbl to reflect a larger risk premium. Meanwhile, we increased our fourth quarter forecast from $59/bbl to $64/bbl.

Last week, JPMorgan analysts noted that since 1967 — aside from the Yom Kippur War in 1973 — none of the 11 major military conflicts involving Israel have had a lasting impact on oil prices. In contrast, events directly involving major regional oil producers — such as the first Gulf War in 1990, the Iraq War in 2003, and the imposition of sanctions on Iran in 2018 — have all led to meaningful and sustained moves in oil markets. "During these episodes, we estimate that oil traded at a $7–$14 per barrel premium to its fair value for an extended period,” JP Morgan added. They added that the most significant and lasting price impacts historically come from “regime changes” in oil-producing countries.  (Yahoo Finance) JP Morgan says that the oil markets are now factoring a 20% chance that the Straits of Hormuz will be materially disrupted.

The Baker Hughes oil rig count seen Friday showed a decrease of 1 unit.

The CFTC's Commitment of Traders report will be released today due to last week's Federal holiday.

Today's Diesel retail average price in the U.S., as per AAA data, has risen to $3.679, which is the best price since February 26.

Energy Market Technicals

Momentum is overbought for the energies, with that for WTI looking to be cresting basis the DC chart.

WTI spot futures see support at 72.93-72.94 and then at 71.00-71.03. Resistance  lies at 76.00-76.07 and then at the double top seen last week at 77.58-77.62. The overnight high is 78.40

Natural Gas Market Overview

Natural Gas---July NG is down 1.9 cents
Natural gas prices are slightly lower this morning after rallying overnight on the back of the heightened Mideast tension and the current heat wave invading the Eastern U.S. But, temperatures are seen retreating to normal in the forecast.

Cities along the U.S. Eastern coast are to see temperatures of 100 degrees today, with heat indices raising the temperatures to 105-110 degrees. Yet, some of the powerburn for natural gas seen this weekend was displaced by stronger wind generation, as per Celsius Energy reporting. The heat wave is seen lasting for 3-4 days. But, the sharp pullback in prices seen since Friday is attributed to a return to normal temperatures after the current heat wave. The Commodity Weather Group on Friday said mostly normal temperatures are expected across the eastern two-thirds of the U.S. for June 30-July 4.

U.S. domestic natural gas production was estimated at 108.2 BCF/d on June 21 compared to the 30 day average of 106.46 BCF/d, according to Bloomberg data.

TTF futures prices in Europe rose today to a fresh high since April 2nd on the Mideast tension. Technically the contract still has positive momentum that is not yet overbought. But, the contract continues to bump against the DC chart's upper bollinger band. Resistance for the spot futures is seen near 43 Euro and support near 39.7 Euro/Mwh.

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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