Daily Energy Market Update July 22,2025

Liquidity’s Daily Market Overview

Energies are lower as tariff/trade concerns remain in focus as the August 1 deadline by the Trump administration for trade deals looms. RB has fallen to its lowest value in 2 weeks on the back of sluggish demand and high imports, as per Reuters commentary. ULSD is down the most today as it gives back some of the gains seen versus the other energies from the past few sessions.

ING commentary seen today synthesizes the market tone: "With the tariff deadline looming, risks are skewed to the downside,  and expectations for a better supplied oil market later in the year only add to the view that there is further downside.” The prospect of an interim trade and tariff deal between the US and India before the August 1 deadline have dimmed, according to Reuters. Meanwhile, the European Union still wants a trade pact with the US, but the bloc is said to be readying its counterattack as President Trump plays hardball and makes a no-deal outcome more likely. President Trump is reportedly pushing for higher blanket tariffs on imports from the EU. “If they want war, they will get war,” a German official told the WSJ.

Reuters reporting says that U.S. gasoline prices could fall below $3 a gallon this summer for the first time in over four years as a stretch of bad weather events dampens fuel demand and a jump in imports fills inventories. The national average gasoline price at the pump today is $3.144, as per the AAA. This price is the lowest seasonally in 4 years, as per Reuters. More fuel-efficient vehicles on the road and post-pandemic changes in driving patterns - particularly remote working - are expected to permanently reduce U.S. gasoline consumption from its peak of more than 9.3 MMBPD in 2018. In the U.S., demand for tanks to store gasoline has climbed since March, reaching a three-year high in June, according to data from storage broker The Tank Tiger. (Reuters)

Not only have money managers raised their net length in Heating Oil, but the volume traded has been high of late. The number of diesel contracts traded exceeded 300,000 lots throughout roughly 15 trading days so far in 2025, the most in any year on record, according to exchange data compiled by Bloomberg.  Market News adds that a variety of near-term factors are helping keep U.S. diesel inventories low even as demand lags. Early summer wildfires in Canada and sanctions against Venezuela, producers of heavy, sour crude, led refiners to use a higher proportion of light crude oil in their operations, yielding less diesel. Market News adds that "Narrow refining margins in late 2024 led to a decrease in runs, and diesel inventories weren’t restocked before a cold winter raised heating demand and further reduced inventories in Q1. Refiners also shifted toward more production of jet fuel in 2024 and have continued to ramp-up production this year, in part at the expense of diesel. "

Bloomberg details the shift in diesel demand from peaking in the 4th quarter to peaking in the 3rd quarter. This change is due to factors like declining heating oil use and increased summer travel. Emerging nations' consumption patterns also play a role. The shift means the market is now at its tightest from July to September, rather than October to December, Bloomberg says. Consumption of winter fuels including heating oil and kerosene is on a structural decline in the industrialized world, replaced by natural gas and electricity. Back in 1990, about 17% of American families heated their homes by burning some kind of refined petroleum product; today, that share has fallen to 9%. Jet fuel demand in summer is growing fast, the article adds. Also, emerging nations have changed the pattern of oil demand. For example, Saudi Arabia consumes 800 MBPD during the summer for air conditioning needs. And lastly, the article stresses how climate change has seen winters turn warmer, thus reducing oil consumption. "So this year, global third-quarter oil demand will be 500 MBPD higher than fourth-quarter consumption. In a dataset going back to 1991, the current year will mark only the fifth time when winter demand will be lower than summer consumption. Because of shifting seasonality, the Northern Hemisphere’s summer is now the tightest period of the year." Global refinery intake in August is seen at 85.4 MMBPD, dropping by October to 81.7 MMBPD. Thus, the Bloomberg analyst suggest that there will be a large oil supply surplus in the 4th quarter.

On Monday, in the WTI LO options a Calendar Spread Option (CSO) put spread traded, the October November one month calendar spread +$0.25 put was purchased against selling of the -$0.25 put at a cost of 11 cents to the buyer of the +$0.25 put. The reference price of the underlying futures spread for the CSO put spread trade was $0.58.

Today is the last trading day for the August WTI futures. Due mostly to the August futures expiration, WTI futures total open interest fell by 34,571 contracts as per CME data at Monday's close.

Energy Market Technicals

Momentum for the September RB & WTI are negative, while that for September ULSD is positive, but looks to be cresting.

WTI support for September is seen at 64.35-64.38 and then at 63.42-63.48. Resistance comes in at 66.36-66.44 and then at the recent highs at 67.51-67.55.

Natural Gas Market Overview

Natural Gas --NG is down 7.5 cents
NG prices are down further today as the early August forecast for Gas Weighted Degree Days (GWDD) is seen reverting to the 5 year average, thus cooling down from the late July heat. Also wind generation has picked up. A slight drop in LNG feedgas volume was also seen weighing on prices, as is the small addition to the 5 year surplus expected in this week's gas storage data.

Celsius Energy says that wind generation is running at 3 times the pace seen one year ago.

"While a mid-Summer heatwave will dominate the Central US over the next 7-10 days, the near-term models suggest that the heat will peak around July 29 with forecast Gas-Weighted Degree Days (GWDDs) retreating back closer to 5-year averages for the first few days of August." (Celsius Energy)

Gas flows to Cheniere's 3.9-BCF/d Corpus Christi LNG export plant in Texas were on track to decline to 1.7 BCF/d on Monday from 2.2 BCF/d on Sunday and an average of 2.3 BCF/d over the prior seven days, according to LSEG data. (Reuters)  The company had said in a report that compressor work on a pipeline providing gas to the plant could reduce gas flows by around 0.4 BCF/d on July 24.

U.S. domestic natural gas production was estimated well above year ago levels at 108.2 BCF/d yesterday, according to Bloomberg data, and compared to the previous 30-day average of 107.4 BCF/d.

On Monday, LSEG forecast average gas demand in the Lower 48, including exports, would rise from 106.3 BCF/d this week to 110.4 BCF/d next week. The forecast for this week is down 1.1 BCF/d from that seen Friday.

Henry Hub next day cash gas was quoted Monday $3.35/$3.38--and was thus at a premium to the spot futures --an event we have not seen since April. The spot August futures were printing near 3.33--thus at a -2/-5 cent differential --down from the near +20 cent differential the futures held last Tuesday. The cash over the screen differential for the natural gas tells us a few things. One is that the market seeing the reduction in cooling demand for early August in the weekend forecast is not expecting next month/August to see the level of demand/heat that we are seeing now in July and have seen earlier in the month. Secondly, the move lower for the August futures may be about long liquidation and /or new short positions, given that money managers have pared back their net short positioning from over 84,000 contracts back on June 10 to the current net short total seen Friday of 19,525 contracts. Also the robust NG production seen is weighing on NG futures, but has not weakened the spot next day cash value given the strong demand seen in the immediate it seems.

On the CME block board on Monday, there was an October January NG call spread butterfly that traded. The -$1.00 and -$0.50 call strikes were bought 1,250 times each against selling 2,500 contracts of the -$0.75 call for a cost of 3.0 cents to the buyer of the wings.  Also, we saw the August $3.25/$3.00 put spread trade in a 1 by 1.5 ratio with the $3.25 put buyer paying 5.3 cents while also buying a delta amount of August futures at $3.31. The August $3.25 and $3.00 puts also traded as a part of a butterfly with the $2.75 put. The $3.25 put was bought versus selling of 3 times as many $3.00 puts and buying twice the amount of $2.75 puts for a cost of 2.1 cents to the buyer of the wings. The September call option open interest rose by almost 15,000 contracts with notable increases in the $3.40, $3.75 and $4.00 strikes. One trade saw the $3.40 call having been bought against selling of the $4.00 call at a cost of 16.6 cents with delta futures sold at $3.38.

Technically NG spot futures momentum has turned negative basis the DC chart due to the steep fall in prices seen the past 2 days. Support for the spot futures lies at 3.214-3.217 and the at 3.149-3.152. Resistance is seen at 3.350-3.359 and then at 3.418-3.425.

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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