Daily Energy Market Update June 4,2025

Overview

Energy prices are lower as a private sector employment report for May disappointed. ADP says May saw 37,000 new jobs --versus the +114,000 expected. Gasoline is down the most as API data disappointed with a large inventory build, versus some forecasts for a draw. The market was buffeted overnight by various factors. Supportive are the Canadian wildfires and simmering geopolitical tension. Negative are the OECD's downward revision of global growth seen Tuesday and the supply increases from OPEC/OPEC+.

ADP data showed private sector employment increased by 37,000 jobs in May, reaching its lowest level since March 2023. Bloomberg forecast a May increase in new jobs of 114,000.

A Bloomberg headline seen Tuesday read : "IRAN: US NUCLEAR-DEAL PROPOSAL NOT CLEAR, RAISES MANY QUESTIONS." This helped boost crude prices Tuesday when the news was released. Iran's Supreme Leader Ayatollah Khamenei said on Wednesday that abandoning uranium enrichment was "100%" against the country's interests, rejecting a central U.S. demand. (Reuters)  But, Reuters also had a headline Tuesday that read : "U.S. PROPOSES INTERIM STEP IN IRAN NUCLEAR TALKS ALLOWING SOME ENRICHMENT -NEW YORK TIMES".

Crude prices eased overnight in Asia, retreating as war risk premiums eased amid Russia's lack of retaliation to a large-scale Ukrainian strike while further pressure came from the OECD's downward revision of global growth seen Tuesday. (Platts)

Supply risks around the Alberta wildfires appear to be receding, at least for now, due to rainfall. Oil producer Canadian Natural Resources restarted production at one of its sites after halting production last week due to fires. However, this relief could be short-lived amid forecasts for drier and warmer weather towards the end of this week. (ING) 

API                  Forecast          Actual
Crude Oil      -0.6/-2.24          -3.28
Gasoline      -0.875/+0.6        +4.73
Distillate      +0.045/+1.0      +0.761
Cushing           n/av              +0.952
Runs            +0.6/+0.9%         n/av

OPEC raised output by 200 MBPD  in May to 27.54 MMBPD, as per a Bloomberg survey. This was less than OPEC’s share of just over 300 MBPD of the total 411 MBPD OPEC+ supply increase. Saudi Arabia bolstered production by 110 MBPD to 9.08 MMBPD in May, the survey showed, though this hike fell short of its allotted quota. The next biggest boost came from Libya, which is exempt from OPEC+ quotas as it gradually recovers from years of conflict and instability. Libya added 50 MBPD to an average of 1.32 MMBPD. (rigzone/ING)

Today, President Trump said it's "extremely hard" to reach a deal with his Chinese counterpart Xi Jinping, denting hopes for a call between the two leaders as trade talks stall. The U.S.-China detente, reached in mid-May in Geneva, has been looking more fragile amid both trade-related and other tensions. Each side has accused the other of violating that truce. (Yahoo Finance) There has been little reaction in energy prices to this news. 

Russia posted a 35% decline in May oil and gas revenue on Wednesday, which could make Moscow more resistant to further OPEC+ output hikes as such moves weigh on crude prices, as per Reuters commentary.

The EIA Tuesday in its Diesel Fuel Update posted a weekly on highway retail fuel price of $3.451. This is the lowest weekly price since September 27,2021. 

Trump signed an executive order increasing the already substantial 25% duties on steel imports he first set in March to 50%. He signaled last week that the tariff rate hike was coming. It went into effect at midnight Wednesday. The new 50% duties also affect aluminum products.  (CNBC) Despite all the trade and geopolitical tensions, markets have a spring in their step today, due to hopes that U.S. bilateral tariff deals will soon emerge, expectations that interest rates will fall in Europe, and signs of economic resilience and tech demand in the U.S., as per Reuters commentary. MSCI’s all-country equity index hit a record high on Wednesday, a whopping 23% surge from the intraday trough of April 7 hit after the initial U.S. tariff sweep. The world index is now almost 6% higher for the year. (Reuters)

Technicals

Momentum for the ULSD has turned positive with the 10 cent rally off the low seen 2 days ago. RB momentum basis the DC chart is trying to turn positive. Crude oil momentum is positive.

WTI spot futures see support at 62.40-62.45 and then at 61.25-61.28. Resistance on the upside is seen at 64.19 and then at 64.86-64.87. The spot futures are trying to stay over the 50 day moving average on the DC chart, that intersects at 62.78.

Natural Gas - NG is down 2.5 cents

NG spot futures are slightly lower as a supportive mid-June weather outlook and reduced gas production are offset to some degree by lingering LNG outages that have seen feed gas demand fall.

Forecaster Atmospheric G2 stated on Tuesday that temperatures are expected to be above normal across most of the central and eastern US for June 8-12, which was seen supporting prices. S&P Global Commodity Insights says that rising temperatures across the Northeast this week will lift U.S. Lower 48 gas-fired power demand to its highest since February. Demand is expected to crest around 37.5 BCF/d from June 6-8. Looking ahead, U.S. power burn could reach 40 BCF/d by mid-June, according to the S&P forecast.

Pipeline flows currently show U.S. domestic natural gas production down another 0.3 BCF/d on the day at 103.95 BCF/d today and the lowest since Feb. 22. Production averaged 106.33 BCF/d over the previous 30 days, according to Bloomberg data.

Natural gas deliveries to US LNG terminals averaged 13.53 BCF/d in the seven days to June 4, compared to the seven-day average of 14.58 BCF/d during the previous period. (Bloomberg)

Next-day prices at the U.S. Henry Hub benchmark in Louisiana were trading around $3 per mmBtu.  Reuters points out that low cash prices kept pressure on futures prices in recent weeks. 

EU gas storage net injection rates have risen above normal in the last week and to the highest since June 2022 on June 1, Gas Infrastructure Europe data shows. Injection rates so far this summer season are just over 3.1% higher than the previous five year average. European gas storage is up to 49.2% full on June 2, according to GIE compared to the previous five-year
average of 60.0% full. But, several European gas storage facilities remain unusually empty two months into the official stockpiling season, Bloomberg reports. Some operators of gas storage sites haven’t been able to auction capacities at cost-covering prices this year, due to an insufficient gap between summer and winter TTF contracts, Bloomberg says. In the near-term, risks are that prices could spike later this year if not enough gas is accumulated ahead of winter, or if the weather turns unexpectedly cold. 

Asian JKM prices are expected to remain rangebound during the week of June 2-6, Platts said, although Asian spot LNG prices have trended downwards recently as end-user buying activity remains limited. Additionally, sources told Platts there is ample supply on the water, with more expected to arrive in Asia next month due to the previously open arbitrage window. China's LNG demand is still weak heading into summer - traditionally a peak consumption period - amid subdued downstream demand and ample alternatives, Platts said. Typically, Chinese buyers begin spot LNG purchases in May. Milder temperatures in China have dampened demand, while powergen consumption is low amid cheaper alternatives. Industrial demand is also sluggish. Offsetting this is the prospect for more demand from Japan and South Korea due to hotter temperatures.

Technically, price action and momentum remain positive overall. Upside resistance is seen at 3.764 and then at 3.840. Support lies at 3.608-3.613 and then at 3.527-3.531. The spot futures continue to test the DC chart's 100 day moving average that lies at 3.701. Notable from the July NG daily chart is the testing of the downtrend resistance line the past 2 days. That line intersects today at 3.726.

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