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- Daily Energy Market Update June 2,2025
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WTI is up $2.78 RB is up 7.09 cents ULSD is up 7.60 cents
Overview
Energies are higher boosted by geopolitical tensions and some supply disruptions. The OPEC+ decision to raise output is seen as having been factored into oil prices last week. A weaker dollar is also likely helping prices as well.
OPEC+, as expected, agreed to raise output by 411 MBPD in July at Saturday's meeting. The decision to raise output was seen as a means to wrestle back market share and to punish some members who have been overproducing. Higher summer oil demand favors increasing output at this time, OPEC+ officials including Russian Deputy Prime Minister Alexander Novak have said. The eight countries will meet on 6 July 2025 to decide on August production levels. Goldman Sachs analysts expect OPEC+ to implement a final 410 MBPD production increase in August. (Reuters)
Iran has increased its uranium enrichment quite a lot just in the past 3 months as per the International Atomic Energy Agency (IAEA). Iran has increased its enriched uranium by almost 50% since the IAEA’s last report in February. The enriched material is a short, technical step away from weapons-grade levels. The IAEA said that Iran’s cooperation with the agency has "been less than satisfactory”. Iran objected to the content of the IAEA's report. Saturday’s comprehensive report could be a basis for possible further steps by European nations, leading to a potential escalation in tensions between Iran and the West. (AP)
A Ukrainian drone attack has destroyed more than 40 Russian planes deep in Russia’s territory, Ukraine’s Security Service said on Sunday, while Moscow pounded Ukraine with missiles and drones just hours before a new round of direct peace talks in Istanbul. Russia on Sunday launched the biggest number of drones on Ukraine since the full-scale invasion in February 2022, Ukraine’s air force said. (AP)
Raging Western Canadian wildfires that have forced thousands of people from their homes are now also prompting evacuations from oil sands projects in northern Alberta. Canadian Natural Resources Ltd., the largest oil and gas producer in the country, said Saturday it had halted 36.5 MBPD of bitumen production. Bitumen is a dense, highly viscous, petroleum-based hydrocarbon. Approximately 238 MBPD of its production has been impacted, Cenovus Energy Inc. said, putting customers on notice that it may not make some oil deliveries from one asset. (Bloomberg/Globe Newswire) Canada is putting out an international call for help to battle 180 wildfires raging across the country, as per CBS News.
The Bloomberg dollar spot index fell about 0.6% in May, making it the longest monthly losing streak in five years. The U.S. dollar plunged anew to its lowest level in six weeks on Monday, amid tariff concerns. Federal Reserve Governor Waller said on Monday that rate cuts remain possible in the second half of the year. The Euro rising against the dollar comes even as the ECB is widely expected to lower its main borrowing rate on Thursday to 2%, half what it was at its peak a year ago. (Reuters)
China’s official Manufacturing PMI rose to 49.5 in May, up from a reading of 49.0 in May. June's PMI was right in line with the Reuters poll forecast. The country's official composite PMI, which encompasses both manufacturing and non-manufacturing activities, rose from 50.2 in April to 50.4 in May. (actionforex.com)
CFTC data issued Friday for the week ended Tuesday May 27 showed that money managers reduced their net length in RB & WTI, and reduced their net shorts in ULSD. WTI net length in futures/options on ICE/CME combined fell by 13,380 contracts. RB net length fell by 10,453 contracts. ULSD net short positions fell by 5,556 contracts to 8,253 contracts.
The Baker Hughes oil rig count seen Friday showed a decrease of 4 units. There was a 1 unit decrease in both the Permian and Utica basins, but a 1 unit increase in the Eagle Ford basin where both oil and gas are produced. The decrease in the Permian is noteworthy to some degree as that is where there has been such a rapid rise in oil and gas production over the past few years.
Sliding Oil Prices Have Reopened the Door to Russian Crude, as per a WSJ story. A cadre of Greek shipping magnates has sent a stream of ships to Russian ports in recent months, stepping back into the fold as the go-to distributors of Moscow's crude to the world. The jump back into the lucrative trade follows a fall in oil prices this year. Handling Russian oil is legal under Western sanctions if the price is below $60 a barre
Technicals
The lows of the session were seen on the opening last night with prices rising very rapidly off those lows. Momentum remains negative for the energies basis the DC charts, although that for the WTI looks as if it wants to turn upward, which may occur if prices were to stay in this current range for the next few days.
WTI spot futures see support at 61.25-61.28. The overnight low is 61.06. Some support is likely above that at 62.27-62.31 via the July 60 minute chart. Resistance comes in at 64.19 and then at 64.86-64.87.
RB spot futures see support at 2.0424-2.0429 and then at the overnight low at 2.0151-2.0164. Resistance lies at 2.1038-2.1051 and then at 2.1230-2.1246. The contract is currently over the 200 day moving average on the DC chart that lies at 2.0636. The 100 day and 50 day moving averages lie above respectively at 2.0984 and 2.1092.
ULSD spot futures have support at 2.0505-2.0510 via the 60 minute chart for July futures and then at 2.0261-2.0283. The overnight low is 2.0038. Resistance comes in at 2.1177-2.1184. The 50 day moving average on the DC chart lies above at 2.1284.
Natural Gas - NG is up 21.8 cents
NG prices are higher on the prospect of some heat in portions of the U.S. this week and heat returning to Texas, thus boosting demand. The sharp oil price rally is also seen as supporting NG today. Also aiding prices is a forecast for hotter than normal temperatures for the summer. The loss of Canadian production may also be supportive as it imperils gas exports to the U.S. Some short covering after July's steep fall last week is likely also aiding prices.
Temperatures in the Eastern portion of the U.S. will rise mid-week to 90-93 degrees. San Antonio will see highs again back to 100 degrees in a few days, while Houston will have highs in the mid-90's.
The summer forecast calls for hotter-than-normal temperatures from coast-to-coast, according to NOAA's Climate Prediction Center and other private forecasters. No part of the U.S. is forecast to see a cooler-than-average summer. Above normal temperatures most likely over the West, Southwest, Florida, and New England, as per the NOAA. (USA Today)
CFTC data issued Friday for the week ended Tuesday May 27 showed that money managers added 6,734 contracts to their net short position, raising the total net short to 63,541 contracts. Additionally, CME open interest data from Friday's activity shows an increase of over 11,000 contracts, which we see as more new shorts mostly, given that prices settled near the lows of the day.
The Baker Hughes gas rig count seen Friday showed a 1 unit increase.
On Friday, data showed that because of maintenance at various LNG plants there was reduced feed gas volumes. Per Friday’s early-cycle pipeline data, LNG feedgas demand fell to 13.95 BCF/d, up just +0.6 BCF/d vs last year & the lowest since May 6. (Celsius Energy)
Commentary seen Friday from Mobius Risk Group analysis has a bullish view : "Emerging weakness in Lower 48 wind generation indicates an imminent transition from the annual high wind/low demand shoulder season to the low wind/high demand summer season,”. (NGI) Wind speeds in Texas are seen low in the coming week or so.
A notice was seen Friday showing gas storage being restricted along a facility fed by a pipeline in Louisiana. The Bobcat Gas Storage (Bobcat) system for Gas Day May 30, 2025: Bobcat has restricted excess injection nominations. Similarly in California, the PG&E Transmission system has reached its upper limit of 5.0 BCF due to over-deliveries by suppliers. This will result in a suspension of pipeline balancing injection service, says PGE. The suspension will begin on May 30, 2025, according to PGE. Bottom line as a colleague says : " basically the slow start to summer has caused more gas to go into storage than capacity."
Celsius Energy offers a bullish element stating that coal to gas switching has diminished, such that Friday the natural gas share of the powerstack exceeded last year's for the first time since the beginning of February. Celsius Energy adds that although we have been in the shoulder season lower demand period, the switch to gas may have more import as we head to June when cooling demand should ramp up.
Technically, the July NG futures fell 7.46% on the week last week. Despite that, momentum basis the DC chart remained positive as the spot futures contract rose by 3.4% from June's settlement on May 23 to Friday's July settlement. Supportive for the NG technically is the double bottom from Thursday/Friday at 3.437/3.440 on the DC chart. The spot futures have tested the DC 100 day moving average at 3.700 today with a high of 3.714. Above that resistance basis the DC chart lies at 3.747-3.751 and then at the recent high at 3.840. Support is seen at 3.552-3.554 and then at the aforementioned double bottom at 3.437/3.440.
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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
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