Daily Energy Market Update July 23,2025

Liquidity’s Daily Market Overview

Energies are lower even as the U.S. and Japan agreed to a trade deal. As one analyst said: "the hurdles and delays being reported in talks with the EU and China will remain a drag on sentiment." Overnight, the energies had rallied on the Japan trade deal news. API data showed a smaller than forecast draw in crude supplies and a larger than forecast build in distillate supplies. The draw in gasoline supplies in the API data seems to be paring the losses for RB versus the other energies this morning.
 
The U.S. and Japan have agreed to a tariff deal. The deal will see U.S. importers pay 15% “reciprocal” tariffs on Japanese goods exported to the United States. But importantly for Japan, the 15% rate will also extend to automobiles and car parts - putting it at an advantage over other major vehicle exporters, which have faced a 25% levy on automotive sector exports since April. Japan will also invest $550 billion dollars into the United States, President Trump said. He added:" This Deal will create Hundreds of Thousands of Jobs."  The Japanese injection of $550 billion into the U.S. would be in the form of equity and loan to support Japanese businesses’ investments in key fields such as pharmaceuticals and semiconductors. The news saw Japanese markets hit a one-year high on Wednesday, with a surge in the price of automaker shares pushing the Nikkei 3.7% higher. (CNN)

But key trade deals with China an the EU remain elusive. The European Union plans to quickly hit the U.S. with 30% tariffs on some €100 billion ($117 billion) worth of goods in the event of no deal and if President Trump carries through with his threat to impose that rate on most of the bloc’s exports after Aug. 1, Bloomberg reports. 

API                  Forecast          Actual
Crude Oil       -0.8/-3.1         -0.577
Gasoline       +0.131/-2.0     -1.228
Distillate       -0.221/1.1      +3.480
Cushing            n/av              +0.314
Runs             Unch/-0.5%        n/av

In another bullish sign for the crude market, the U.S. Energy secretary said on Tuesday that the U.S. would consider sanctioning Russian oil to end the war in Ukraine. (Reuters)

ING analysis points put that the Brent forward curve is not signaling a large surplus for oil supplies in the 4th quarter of 2025 into 2026. Two months ago, the forward curve had an interesting shape. It was in backwardation through until the November 2025 contract and then in contango from that point on. Fast forward to today, and the shape of the forward curve has changed quite drastically. It’s in backwardation into early next year, then essentially flat for a large part of 2026, before moving into a shallow contango through 2027. The Dec-25 – Dec-26 Brent spread also highlights this. The spread is moving from a contango of more than $1.80/bbl in early May to a backwardation of around $0.50/bbl currently.

Energy Market Technicals

Momentum basis the WTI DC chart and RB September daily chart remain negative, while that for September ULSD looks to be trying to turn negative.

WTI has a rollover gap on the DC chart from the August futures expiration. The gap goes from today's September high of 65.78 to August's low yesterday of 65.99. Resistance is seen at 65.98-66.03 and then at 67.13. Support below lies at 64.50-64.60 and then at 64.00 and then at 62.75-62.82.

Natural Gas Market Overview

Natural Gas--August NG is down 4.3 cents
NG is lower as the narrative remains one of weaker demand forthcoming versus the current heatwave amid robust natural gas production. But,as one analyst noted:" The January contract is essentially already testing support, sitting at its lowest level since late spring, That could be a buying signal for some physical buyers hedging winter exposure such as utilities or larger retail suppliers."

Forecaster Vaisala on Tuesday said forecasts shifted cooler for the Midwest in the latter half of the July 27-31 period, and milder conditions are expected to continue for August 1-5 over much of the US. (Barchart) Celsius Energy is calling for 191 GWDDs for the period of July 23 to August 5, which is down 15 GWDD from last week's forecast.

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. Earlier in the week, Celsius Energy had pointed out how the 108 BCF/d current production level was up about 6 BCF/d versus a year ago.

European gas storage is up to 65.13% full on July 20 compared to the previous five-year average of 73.6% full, according to Gas Infrastructure Europe. Net injection rates are holding above normal. A recovery in Norwegian gas flows to Europe following an unplanned outage last week has eased supply concerns. ING and Societe Generale add that European gas prices will need to remain well supported through the year to ensure enough LNG is brought into the region ahead of the 2025/26 winter.

Following an expected slowdown in 2025, global natural gas demand growth is forecast to accelerate in 2026, sending total demand to a new all-time high, the IEA said in its latest quarterly Gas Market Report. But, overall, global natural gas demand growth is forecast to slow to about 1.3% in 2025 from 2.8% in 2024. But, global growth in 2026 is seen rising to +2.0%. Asia’s gas demand is expected to rise by more than 4% in 2026, accounting for around half of global gas demand growth. “Consequently, the region’s LNG imports are projected to increase by 10% in 2026 following an expected decline in 2025,” IEA said. But, in 2026, LNG supply is set to rise by 7%, or 40 bcm—its largest increase since 2019—as new projects come online in the US, Canada, and Qatar.  Market fundamentals remained tight in first-half 2025 due to a combination of lower Russian piped gas exports to the European Union, slower growth in LNG output, and higher storage injection needs in Europe,as per the IEA's report.  (Oil & Gas Journal)

Technically, the low from late April in January futures is 4.594--with the daily chart's lower bollinger band right there. Below that support is seen at 4.516. Upside resistance lies at 4.738-4.743. Momentum remains negative for the January futures basis its daily chart.

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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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