Daily Energy Market Update July 25,2025

Liquidity’s Daily Market Overview

Energies are higher on the back of "trade optimism" --even as Venezuelan oil supply is seen increasing per news wire comments. Yet, analysts point out that crude prices are in a holding pattern, which is evidenced by the range seen this month with WTI stuck basically between 64.70 and 68.95.

Oil, along with stock markets, gained support from the prospect of more deals between the United States and trading partners ahead of an August 1 deadline for new tariffs. "It looks like talks with the EU are moving in the right direction," ING analysts say. In India, Commerce Minister Piyush Goyal said he was optimistic that his country could reach an agreement with the U.S., to avert threatened tariffs of 26%. (Investing.com)

The U.S. is preparing to allow partners of Venezuela's state-run PDVSA, starting with U.S. oil major Chevron to operate with limitations in the sanctioned nation, sources said on Thursday. Venezuelan oil exports could consequently increase by a little more than 200 MBPD, which would be welcome news for U.S. refiners, as it would ease tightness in the heavier crude market, ING analysts wrote. Of late, U.S. Gulf Coast refiners have been snapping up higher volumes of Middle Eastern and South American crudes to offset the loss of Venezuelan and Mexican barrels, according to ship tracking data. The U.S. imported about 175 MBPD of Venezuelan crude on average this year before the licenses were revoked, accounting for about 16% of Gulf Coast oil imports, according to data from research firm Kpler. Meanwhile, imports of popular Mexican heavy grade Maya have fallen to 172 MBPD so far in July, the lowest on record due to declining output and quality issues that have cut interest in the grade. Shipments of heavy, high-sulfur crude from Colombia, including Castilla and Vasconia grades, more than doubled to 225 MBPD so far in July, the highest monthly level in three years.(Reuters) Worth noting is that the loss of some heavy crude imports was partially a reason for the strength in distillates in recent weeks as less heavy crude meant less distillate yield in the refinery process. "Switching to crude grades of vastly different characteristics can be operationally challenging and limit production, shrinking margins.", as per Reuters reporting.

OPEC is unlikely to alter existing plans to raise oil output when it meets on Monday, four OPEC+ delegates told Reuters. The sources noted that OPEC is keen to recover market share while summer demand is helping absorb extra barrels. The JMMC meeting is scheduled for 1200 GMT on Monday. Four OPEC+ sources told Reuters said the meeting is unlikely to alter the group’s existing policy, which calls for eight members to raise output by 548 MBPD in August. Another source said it was too early to say. The OPEC 8 involved in voluntary cuts will hold a separate meeting on August 3 and remain likely to agree to a further 548 MBPD hike for September, three of the sources said. This sentiment had previously been reported earlier this month.

ICE gasoil cracks have weakened recently, falling back below US$25/bbl, after hitting US$28/bbl earlier this week. However, cracks remain at elevated levels amid tightness in the middle distillate market. In Europe, gasoil inventories in the Amsterdam-Rotterdam-Antwerp region fell by 8kt week on week to 1.75mt, the lowest level since January 2024. ING adds that despite the distillate build seen in this week's DOE data, distillate stockpiles in the U.S. are still at their seasonally lowest level since 1996.  Holdings of middle distillates in the trading hub of Singapore have also plummeted to their lowest levels since February 2024. The strength in middle distillate cracks has pushed refinery margins higher, which should see refiners increase run rates. OPEC+ supply increases should also increase the availability of medium sour crude moving forward, helping to push middle distillate yields higher, ING says. Goldman Sachs sees distillate cracks staying around $10 a barrel higher in the second half of the year and in 2026 compared to pre-pandemic values. Tey see the possibility though for some near term weakness in the cracks. A crunch in global processing capacity is a key driver, exacerbated by unexpected refinery outages in Europe and limited availability of certain types of crude, Goldman adds.

Adding to the market confidence was a Reuters report that said on Thursday that Russia is expected to introduce a tighter gasoline export ban in the coming days, including for fuel producers, to tackle rising prices.

Energy Market Technicals

Momentum remains negative for the energies. Notable is the tightening of the bollinger bands on the WTI DC chart; this suggests that a breakout in either direction is forthcoming.

WTI spot futures see support at 65.40-65.42 and then at 64.66-64.71, which is the low from earlier this week. Resistance comes in at 67.13 and then at 67.76-67.83.

Natural Gas Market Overview

Natural Gas-- September NG is up 1 tick
NG futures are near unchanged now after rallying a bit overnight continuing the uptick seen Thursday off the back of a bullish EIA storage number and the forecasts for the hottest weather in three years to blanket much of the country early next week. (Reuters) Yet, despite the bullish EIA number and a better technical picture, some skepticism about the strength of the NG remains, or as one commentary reads: "sentiment remains cautious."

The EIA storage number was bullish with a build of 23 BCF, beating forecasts by 7 to 8 BCF. The immediate reaction to the data was a rise in very active volume to test the high for the day of 3.207 seen prior in the session. Total gas in storage rose to 3.075 TCF. That is +171 BCF/ +5.89% versus the 5 year average, but -153 BCF/-4.74% versus last year's level.  The following comments were seen re the storage data : (1) " the smaller-than-expected build has so far not added any significant bullish sentiment back into the fray. Intense heat over the coming week should continue to limit storage builds for the next two reports, but a shift to a milder solution in the East near the end of the 10-day period should help to alleviate demand from there." (2) Balances were tighter in this bullish event, but "Expect it to be a one-off event as imbalances loosened considerably this week due to stronger wind generation. "

Yet, Celsius Energy cites that wind generation has weakened :"With wind generation fading and temperatures heating up across the Northeast,  the natural gas powerburn demand has finally pulled above year-ago levels intraday. On a daily basis, however, burns will likely trail 2024 for at least one more day at around 47 BCF/day."

Some of the skepticism re the NG market's ability to rally and or strengthen could be evidenced by the weakness in the front month spread, that fell Thursday to a contract low, settling at a discount of 5.3 cents. Yet, we wish to ask if the strength of the September versus August is maybe being seen for 2 reasons. (1) is there long liquidation occurring in the August contract, which expires Tuesday? (2) is there some fresh buying happening in the September contract off the back of the supportive EIA number and the prospect for more heat next week ? 

Technically the September NG futures had an inside day Thursday, having had a price range within the one seen Wednesday. There is a double bottom from Wednesday/Thursday at 3.107/3.112. Furthermore supportive for the September contract is the confirmation of the mean reversion setup from Wednesday, as Thursday the contract rose to settle over the lower bollinger band on the daily chart. That band today lies at about 3.100. But, momentum remains negative for the September futures basis the daily chart. September NG sees support at 3.084 below the double bottom at 3.107-3.112. Resistance lies at 3.207 and then at 3.284-3.291.

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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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