Daily Energy Market Update October 21,2025

Liquidity’s Daily Market Overview

Energies are higher supported by geopolitical issues. Notably the prospect of the meeting between President Trump and Chinese leader Xi at the end of the month is seen as supportive. The uptick in prices today comes despite many stories discussing the large amount of oil in transit / on the water.

Risk of a market surplus weighs as latest estimates from Vortexa cited by Bloomberg show more than 1.24 billion barrels have been amassed on the world’s tanker fleet, above levels seen in 2020. Citigroup said that OECD commercial oil inventories over the last month have risen by more than 10 MMBBL and water levels are "swelling."  In its note to clients, Citi also said that China's oil purchases, which have helped to support prices, may be slowing. The slowdown in China's oil buying may also be affected by U.S. sanctions on China's Rizhao oil terminal for helping to facilitate Iranian energy trading, the bank said. We would like to add that Chinese crude oil purchases may also be slowing as import quotas run out as year end approaches. But, Citigroup added that the lowest level of long positioning in years by speculative interests may support prices. Citi analysts' bear case has Brent priced at $55/bbl in the fourth quarter and $50/bbl in the first quarter.

Today, Rystad analysis says that in the physical market, cargoes are going unsold and discounting has spread across West African grades with a large surplus still expected to come. Goldman Sachs says that the oil market outlook is bearish as a surplus has started to show although impending stock builds for November are already priced in.  Brent is forecast falling to $52/bbl in Q4 2026, they say. Yet, one analyst says that the market structure of the crude curve had not yet shifted to levels that would encourage large stock builds, meaning that the contango in the curve is not steep enough. "This may signal a market reluctant to fully price in the anticipated surplus — perhaps reflecting expectations that the glut will prove smaller than feared," he said. The IEA’s forecast for a massive surplus would lead to a strongly upward-sloped futures curve, called super contango, but that has not emerged so far, UBS' analyst says.  (Reuters)

The American Petroleum Institute has come out against new legislation to expand year-round sales of E15 gasoline, signaling renewed friction between the oil and ethanol industries after a short-lived period of cooperation, Reuters reported. Earlier this year, API had aligned with farm-state lawmakers and ethanol producers to support stronger renewable fuel mandates and a December proposal allowing year-round E15 sales.

On Monday, GasBuddy said that the national average price of gasoline was at its lowest since 2021. GasBuddy noted on X that the intraday low at $2.969/gal according to its data represents a 4-year low. Today's national average price at the pump for gasoline, as per AAA data, is $3.047. Today the price rose for the first time in 10 days, after itting its lowest value yesterday since December 30,2024. Monday's average price was $3.036.

There was a large open interest increase in the December $60 calls on the CME from Monday's activity. One notable trade saw 2 of the $60 calls purchased against selling of one $58 call--with the $60 call buyer paying 25 cents. 

The WTI curve has rebounded, evidenced by the December 25 December 26 spread trading today at $-1.07, which is 60 cents higher than the low seen yesterday.

Today is the last trading day for the November WTI futures.

Energy Market Technicals

Momentum for the ULSD on the December daily chart has turned positive. The RB momentum looks poised to turn upward. WTI momentum, basis the December daily chart, is still negative, but is nearly oversold.

December WTI fell yesterday to its lowest prices since May 5th. That low of 55.17 is currently support. Resistance lies at 58.63-58.72 and then at 59.69.

Natural Gas Market Overview

Natural Gas --November NG is up 2.5 cents at 3.422
NG spot futures are up slightly continuing Monday's sharp rally.  A colder weather pattern than previously forecast has been the catalyst for the rally.  The November contract is again today performing better than the rest of the contracts in NG, as it did Monday.

On Monday, LSEG projected average gas demand in the Lower 48 states, including exports, would rise from 101.5 BCF/d this week to 105.5 BCF/d next week. These forecasts were up a total of 3.4 BCF/d from those issued Friday.

Forecaster Atmospheric G2 said Monday that forecasts shifted colder across the northeastern and central regions of the US for October 25-29 and shifted cooler over the eastern two-thirds of the country for October 30 to November 3. 

Early estimates for the gas storage data from the EIA for this week's release are for a build of 74 to 81 BCF. That compares to last year's build of 79 BCF and the 5 year average build of 77 BCF.

In the LN/NG options on Monday the November/December minus 55 cents call open interest rose by 8,000 contracts. The call traded 2.7 cents in size. 

Some of Monday's rally was also about short covering, evidenced by the drop in November futures open interest of 21,644 contracts. November futures rose by 12.93% basis the settlement Monday. The 2 days rise seen Friday and Monday in spot futures is the largest dollar gain seen since March 4th and the largest percentage gain seen since October 30,2024. November futures settled up Monday by 38.9 cents, while the rest of the winter strip settled up 19.7 to 29.4 cents.

U.S. natural gas pipeline exports to Mexico averaged 7.5 BCF/d in May 2025, the most of any month on record as Mexico’s demand for natural gas increases, the EIA said on Monday. Several factors have contributed to the increase. Increased electric power demand, limited gas storage and new pipelines having been commissioned in recent years. (Reuters)  In August, NGI reported that traders should expect continued strength in Mexico’s demand for US natural gas for the remainder of 2025 and into 2026 as output stalls at Mexico’s state-owned Pemex.  Export flows to Mexico are estimated today at 6.76 BCF/d compared to the 30-day average of 6.97 BCF/d, Bloomberg data shows.

Technically the rally Monday and today has seen momentum turn positive basis the DC chart. Upside resistance lies at at the overnight high at 3.499-3.504 and then at 3.540-3.550. Support lies at 3.351-3.355 and then at 3.293-3.296.

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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