Daily Energy Market Update 6-25-2025

Liquidity’s Daily Market Overview

Energies are higher today on the back of positive crude data from the API last night and amid hopes for a possible rate cut by the Fed in July. A weaker dollar is likely also supporting energy prices.

API                 Forecast           Actual
Crude Oil      -0.8/-1.9           -4.28
Gasoline      +0.2/+0.681     +0.764
Distillate      +0.4/+0.7         -1.026
Cushing           n/av               -0.075
Runs            +0.4/+0.5%         n/av

In the aftermath of the ceasefire between Iran and Israel, President Trump wrote on social media: "China can now continue to purchase Oil from Iran. Hopefully, they will be purchasing plenty from the U.S. also". (Yahoo Finance) But, a senior White House official signalled Tuesday that sanctions on Iranian oil would remain. (Bloomberg)

"Fed Chair Powell's first testimony to Congress (on Tuesday) has hinted at a slight chance of bringing forward the first rate cut of 2025 to July, which should offer some form of floor on oil prices from the demand side,", as per one market analyst. Softening economic data and a dramatic reversal in oil prices suggest the Fed may lower rates. Previously hawkish Fed board governor Michelle Bowman indicated this week she may vote for a cut as soon as July. (Reuters)

Falling yields in the U.S. and plans at the NATO summit for Germany to outline details of the big spending, borrowing and defense push this week helped the euro hit new three-year highs on Tuesday and hold above $1.16 today. 

ING suggests :"While concerns regarding Middle Eastern supply have diminished for now, they have not entirely disappeared, and there remains a stronger demand for immediate supply. "

Phillips 66's CEO says that California has lost its crude oil advantage. In discussing the closure of one of their California refineries, the CEO said :" the refinery was not "particularly competitive," in part because of the higher costs of producing gasoline that met the state's stricter specifications. Just the base cost of operating a refinery in California is [two times] that of a Gulf Coast refinery. " He said the refinery was configured to run on California crude, and in-state production of that grade has fallen by 75%. He said the company is getting permits to import refined products from offshore suppliers. He compared the California market to that in the U.S. Northeast, which he said is also "refinery-short." He adds that most refined products in the Northeast are imported and "no one feels that in the market.  (Dow Jones)

On the CME Tuesday there was a trade of 1,700 lots each in the Brent 1 month CSO put options in October/November, November/December and December/January, thus the 4th quarter strip. The +25 cent put was bought at a cost of 32 cents in each of the months. The futures spreads settled +43/+13/+1 cent respectively. The futures spreads settled down 14 to 18 cents from Monday's closing prices.

The EIA released their weekly retail diesel price on Tuesday. The price this week is $3.775, which is up 20.4 cents from last week's price and is the highest retail diesel price --as per EIA data--seen since the week of July 22,2024. The retail gasoline price rose on the week by 7.3 cents to $3.338, which is the best since the week of April 7th.

Energy Market Technicals

Momentum remains negative for the energies.

Spot WTI futures see support at 64.00 and then at 62.45-62.50. Resistance lies at 66.90 and then at 67.60-67.63.

.Natural Gas Market Overview

Natural Gas---August NG is down 1.6 cents
NG prices are slipping a bit further overnight as temperatures are seen reverting to near normal after the current heat wave along the U.S. East Coast ends in the next 24 hours.

Forecaster Atmospheric G2 said Tuesday that forecasts shifted cooler for parts of the southwestern and south-central US for June 29-July 3.  (Barchart.com) NatGas Weather cites strong wind and solar generation as also having pressured gas prices on Tuesday. (Dow Jones)

The July NG / LN options expire today. The open interest on the CME for the $3.50 calls is 11,648 contracts, while the $3.50 puts have 27,893 contracts open. The $3.60 puts have 13,348  contracts open. 

The European Union's member states have reached an agreement with the EU Parliament to loosen the EU's rules on filling gas storage. Governments had backed plans already in April to soften the rules before winter. Member states are now allowed to meet the 90% target for filling storage anytime between October 1 and December 1.  Once the 90% target is met, it should not be required to maintain that level until 1 December. The EU's member states should also have the possibility to deviate by up to ten percentage points from the filling target in case of difficult market conditions. (Reuters)

Shipping costs for liquefied natural gas cargoes have rallied to their highest in about eight months with vessel availability tightened by a shift in more ships heading to Asia at the same time as conflict has escalated in the Middle East. In the past two weeks however, it has become equally profitable to deliver LNG to both Europe and Asia, so spot cargoes are now incentivised to travel to Asia via the Cape of Good Hope, increasing average voyage times and reducing vessels available for charter, as per one commodities analyst cited by Reuters. 

NGI commentary suggests that "A combination of robust domestic cooling needs and mounting calls for exports is widely expected to send natural gas demand surging through the balance of summer in the South Central region of the Lower 48. This could minimize storage injections and bolster Permian Basin spot prices."

Technically NG futures have negative momentum. August futures have support at 3.610 and then at 3.518-3.524. Resistance lies at 3.733-3.726 and then at 3.817-3.820.

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