Daily Energy Market Update August 11,2025

Liquidity’s Daily Market Overview

Energies are higher with the focus on the Russia / U.S. meeting later this week. The energies may well stay in a range this week awaiting the outcome of Friday's meeting to see if any resolution of the Ukraine conflict may come out of the meeting. Will sanctions on Russia ease? Will they become more restrictive to oil flows from Russia and on its trading partners? Also in focus this week are the monthly reports from the EIA, OPEC & the IEA. 

President Trump’s deadline for Russia to strike a peace deal with Ukraine passed without stricter U.S. sanctions imposed on Moscow. This likely contributed to the recent weakness in crude oil prices. On Friday, Brent and WTI fell to their lowest levels since early June amid worries over demand due to tariffs and due to the supply increase announced by OPEC+ last weekend. The market is focused on Trump’s meeting with President Putin on Friday and whether any progress towards a peace deal can be made. But with Russia demanding that Ukraine cede occupied territory to end the war, it’s difficult to see a quick solution. It’s unlikely that Ukraine will agree to give up its own territory. If we do see some level of de-escalation, it would remove sanction risk from the oil market. This would likely drive prices lower, given the bearish fundamentals, as per ING commentary.

On Friday, Reuters reported that U.S. crude oil exports eased in July to the lowest levels in nearly four years on low domestic supplies and as Asian and European buyers found cheaper alternatives, undermining U.S. President Donald Trump's push for more foreign countries to purchase U.S. energy supplies. U.S. crude exports tumbled to about 3.1 MMBPD in July, the lowest since October 2021, when the COVID-19 pandemic ravaged demand, according to data from ship tracking firm Kpler. The narrow WTI/Brent arb made WTI less attractive. WTI's discount to Brent in May and June, when oil delivered in July is traded, averaged about $3 a barrel, well above the $4 discount that typically encourages foreign countries to buy U.S. oil, the Reuters article added. Kpler analysis added that the WTI barrels were more needed "at home" than abroad. Inventories of oil at the key storage hub in Cushing, Oklahoma, hovered just above operational levels, amid lower Canadian oil flows due to a wildfire and last year's Trans Mountain pipeline expansion. That kept more domestic barrels in the U.S., traders and analysts said. Exports of U.S. crude to Asia fell to 862 MBPD in July, the lowest since January 2019, and well below the three-month average of 1.1 MMBPD, Kpler data showed. But, exports to Asia of U.S. crude are expected to step up in the fourth quarter as Middle East oil prices strengthened, making it more economic to ship oil to Asia from the U.S., trade sources said last week. Energy Aspects forecast about a 400 MBPD increase to August from July in U.S. Gulf Coast exports.Exports to Europe fell 14%  from June to 1.6 MMBPD in July.

With regard to the WTI/Brent relationship, Bloomberg cited commentary from Sparta Commodities. WTI may increasingly become the market’s marginal cheaper barrel over the medium term, according to a Sparta Commodities note. The shift comes as refining slates get heavier and more sour while overall crude balances are longer. This may mean that WTI becomes “the marginal barrel that needs to get cheap, which will necessitate, all in all, a wider WTI-Brent spread.”  The WTI-Brent spread reached -$3.59/bbl on Friday, the widest since end-April. In the meantime, the U.S. grade has seen a substantial change in Asian demand after China curbed buying and Exxon Mobil started an upgrader in Singapore, pressuring the grade “to price cheaper and cheaper.”  Still, WTI demand could rise in the Mediterranean following higher Indian buying of CPC Blend as well as the recent organic chloride issues in the region. The U.S. grade is also looking fairly competitive again in Northwest Europe.

Saudi crude oil exports to China are set to fall in September after the Kingdom raised its OSP last week for the second month in a row to the highest level in 5 months.  Chinese imports in September are seen at 1.43 MMBPD, down from a more than two-year high of 1.65 MMBPD in August. Separately, several Indian refiners were allotted full volumes for September and did not request more supply, despite uncertainties around Russian crude imports after U.S. President Donald Trump's warnings against buying oil from Moscow. (Reuters) 

Money managers reduced their net length in the energies in the week ended Tuesday August 5th. Most notably ULSD length fell by 14,307 contracts as mostly longs were sold.  Gasoil length was reduced by 14, 637 contracts. Brent length fell by 20,375 contracts. (ING) WTI net length fell by 10,242 contracts on ICE/CME combined. This was mostly a function of longs sold on the CME. RB net length fell by 4,430 contracts as primarily longs were sold.

Chinese PPI data disappointed over the weekend. July's PPI fell by 3.6% year on year. This was worse than the Reuters forecast of -3.3%. The PPI data thus signaled that weak domestic demand and trade uncertainty continue to weigh on the economy. It was the 25th consecutive month of PPI contraction, reflecting ongoing price competition and overcapacity in key industries. But, on a monthly basis, PPI fell 0.2%, an improvement from June’s 0.4% drop. Also seen as a positive was the CPI coming in flat year on year in July. Reuters had forecast the CPI data to show a -0.1% figure.  (investing.com)

The Baker Hughes oil rig count issued Friday showed one unit was added.

Tomorrow (Tuesday)  will see the issuance of the EIA's Monthly STEO and the OPEC monthly oil market. This will be followed Wednesday by the IEA's monthly oil market report.

Energy Market Technicals

Technically RB and the crude oils are having inside trading days today versus Friday's price range. Momentum basis the DC chart is oversold for the Brent and RB, and very nearly so for the WTI, while ULSD momentum is turning positive from an oversold condition.

WTI spot futures see support at Friday's low at 62.77-62.82. Resistance is seen at 65.09-65.11 and then at 66.39-66.45.

Natural Gas Market Overview

Natural Gas- NG is down 1.3 cents
NG spot futures have moved lower over the weekend as late August weather forecasts have moderated. Recent strong production and still ample storage levels are seen also providing a negative tinge to NG pricing.

On Friday, LSEG said average gas output in the Lower 48 states rose to 108.2 BCF/d so far in August. Output is on track for a new monthly record high, above July's record of 107.9 BCF/d.
On August 5th, LSEG said that August production had averaged 108.0 BCF/d so far.

On Friday, LSEG projected average gas demand in the Lower 48 states, including exports, would rise from 105.9 BCF/d  "this" week to 109.0 BCF/d "next" week and 111.3 BCF/d in two weeks. The forecast for "this" week and "next" was down 1.4 BCF/d from Monday's estimates.

The average amount of gas flowing to the eight big U.S. LNG export plants rose to 16.1 BCF/d so far in August, up from 15.5 BCF/d in July. The August average tops the April record of 16.0 BCF/d.

Friday's CFTC COT report showed that money managers added to their net NG short positioning in the week ended Tuesday August 5th. The net short total rose by 14,722 contracts as mostly new shorts were added. The net short total rose to 27,727 contracts.

The Baker Hughes oil rig count issued Friday showed one unit was idled.

The NG spot futures session's low of 2.881 was seen on the opening last night, thus testing the recent low of 2.895. Below that support is seen at the major lows at 2.858-2.859. Resistance lies at 3.074-3.078. Momentum remains positive basis the DC chart for NG.

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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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