Daily Energy Market Update July 1,2025

Liquidity’s Daily Market Overview

Energy prices are higher even as news wire commentaries cite the expected OPEC+ production hike forthcoming at the July 6th meeting and trade tensions amid tariff talks. The boost in prices today may be a function of supportive PMI data from China and the expectation that Saudi Arabia will raise their OSP to Asia for August loading amid "robust summer fuel demand", as per Reuters reporting.

The Caixin/S&P Global manufacturing purchasing managers’ index (PMI) came in at 50.4, beating Reuters’ median estimate of 49.0 and rebounding from 48.3 in May. Chinese exporters have sought to front-load shipments to avoid U.S. tariffs, which were poised to rise when the 90-day trade truce expires in mid-August.  The rise in Caixin PMI was largely supported by an expansion in production, which grew at the fastest pace since November, according to Caixin and S&P Global, as “better trade conditions and promotional activities” boosted new orders.  (CNBC)

Saudi Arabia may raise its August crude oil prices for buyers in Asia to the highest in four months, after spot prices surged during the Iran-Israel conflict and on robust summer fuel demand, trade sources said. The August official selling price (OSP) for the flagship Arab Light crude may increase by 50-80 cents to a premium over the average Oman/Dubai price between $1.70 and $2 a barrel. The August OSPs for Arab Extra Light, Arab Medium and Arab Heavy crude are expected to rise 50-60 cents a barrel from July, the survey showed. Asian refiners have already requested more term crude supplies loading in August and September from Middle Eastern producers. Refiners are also processing more crude to meet robust summer fuel demand, the sources said.

The notion of "robust demand" is echoed in the price seen for Russian crude. Russian ESPO Blend crude oil premiums for late July and early August deliveries to China have maintained stable levels compared to earlier July shipments, according to a Reuters report on Tuesday. The premium over ICE Brent remained above $2 per barrel, supported by strong Chinese buying interest and healthy refining margins. This stability comes despite increased competition from Iranian oil supplies. The rise in ESPO crude pricing may be to some degree due to an expected decline in exports of Russia’s Sokol oil grade to China during July-August, due to refinery maintenance.

In WTI options (the LO contract), the 4th quarter 1 month CSO strip spreads traded. The Oct/Nov , Nov/Dec & Dec/Jan 1 month spread options each traded 500 by 1,000 lots. The +$1.00 call was sold against buying of twice as many of the +$1.50 calls for a cost of 1 cent for the buyer of the higher priced call strike. As per CME open interest data, these were positions being initiated. Further bearishness in WTI was seen in 2 trades of put spreads. 1,000 contracts of the August $62/$60 put spread traded 32 cents. Further out along the calendar, in the February options, the $45/$40 put spread traded 45 cents with delta futures February purchases at $61.10.

Morgan Stanley expects Brent futures to fall to around $60/bbl by early next year with an oversupply of 1.3 MMBPD in 2026, Reuters said. Morgan Stanley see the market being well supplied and geopolitical risk abating following the Israel-Iran de-escalation.

But, a Market Watch article paints a more bullish picture overall for oil prices on the basis of production. The article reads as follows: " On a historical basis, oil was produced primarily from conventional reservoirs that were assumed to decline at a global rate of about 6% on average.  In a report from August 2024, ExxonMobil Corp. said global oil and natural-gas supplies would "virtually disappear without continued investment." It estimated that oil production would naturally decline at a rate of about 15% per year. In other words, with no new investment, global oil supplies would fall by more than 15 MMBPD in the first year alone, ExxonMobil said. "Decline rates of existing fields are the biggest driver for new supply needed, and the reason significant investment is still required even before accounting for demand growth," the ExxonMobil report said. The Exxon report added that the increasing mix in production of shale oil decline faster than conventional oil and natural gas resources.

Energy Market Technicals

Technicals
Technically the WTI & RB spot futures are seeing the DC chart's momentum getting nearly oversold.

WTI continues to show a sideways trading pattern from the past several sessions. Resistance lies above at 66.42 and then at 67.83. Support comes in at 64.50-64.51 and then at 63.96-64.00.

Natural Gas Market Overview

Natural Gas--NG is down 7.3 cents
The slide in NG prices continues as production is strong and weather demand is not seen nearly equaling that seen last week. A comment seen re the current weather versus that of last week says : " demand may wither with the hottest weather of summer potentially booked, and be met in part by wind and solar."

Natural gas production hit 107.4 BCF/d on Sunday and Monday. (NGI/Bloomberg) LSEG had the June average output at 105.9 BCF/d as per Monday data. May's average output was 105.2 BCF/d.

Forecaster Atmospheric G2 said Monday that forecasts shifted cooler across the central and eastern US for July 10-14.  (Barchart.com) Additionally, demand forecasts as per LSEG were dialed back. LSEG estimated 199 total degree days (TDDs) over the next two weeks, compared with 234 estimated on Friday. The normal for this time of year is 170 TDDs. LSEG forecasts NG demand this week at 105.4 BCF/d, dropping to 105.0 BCF/d next week. Those forecasts are down a total of 1.6 BCF/d from those seen Friday.

One comment heard yesterday regarding NG futures prices was : "the market is violently range bound." The pullback the last 24 hours from Friday's value underscores that. The prior 2 days' highs were 3.738/3.751. And as we suggested last Monday, the $4.00 level seems unsustainable. On the down side, the area near $3.10 provides support with the notion that demand will be ample to keep prices above that. Adequate weather demand near the 10 year average and the return of LNG plants from maintenance should keep a floor underneath current pricing seems to be the prevailing sentiment.

In Natural Gas options (LN contract), the October November 1 month CSO call spread traded. The buyer of the -25 cents call sold twice as many of the -15 cent calls for a cost of 0.9 cents. The volume of the Oct/Nov CSO traded was 1,000 by 2,000 contracts. Additionally the Sept/Nov two month CSO call spread traded 1,250 contracts, with a buyer of the -25 cent call selling the -15 cent call against that for a cost of 1.4 cents. The trade was a liquidation of open positons with the entire September/November CSO call open interest now at zero.

In the NG futures, the DC chart gap from 3.513 down to 3.425 that was created last week when August became the spot contract has been filled. The  August daily chart shows the lower bollinger band having been tested Monday. That band today intersects at $3.361. The August daily chart shows that today's price is the lowest seen since December 20, 2024. The DC chart momentum is trying to stay positive. Support is seen at 3.335-3.340 and then at 3.260-3.264. Resistance is seen at the overnight high at 3.466-3.468 and then at 3.576.

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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