Daily Energy Market Update October 27,2025

Liquidity’s Daily Market Overview

Energies are mixed with crude oil and RB near unchanged, but distillates higher. Crude oil is lower "amid uncertainty" concerning trade talks and the U.S. sanctions on Russian oil.

Overnight, the energies rallied as optimism has grown for this Thursday's Trump/Xi summit --with a headline from Yahoo Finance stating that :" advance talks yield a ‘substantial framework’". The U.S. Treasury Secretary said that the additional 100% tariff threat, set to have begun Nov. 1, is “effectively off the table,” China is expected to delay export controls on rare earths. But, Reuters commentary says that oil prices were " pressured by skepticism that a U.S. and Chinese trade deal framework would immediately boost oil demand. " (Reuters/ING)

Iraq, the OPEC group's biggest overproducer, was in negotiations over the size of its quota within its available capacity of 5.5 MMBPD, the oil minister said at an oil conference on Monday. Iraqi crude oil exports, including from the Kurdistan region, are seen currently at 3.6 MMBPD. In September they ran at 3.4 MMBPD, which was a 7 month high. A fire at Iraq's Zubair oilfield on Sunday did not impact shipments.  (Reuters/Quantum Commodities)

Russia's Ryazan oil refinery, which supplies fuel to Moscow Oblast, halted oil processing at its main crude distillation unit on Oct. 23, Reuters reported, citing two unnamed industry sources. A Ukrainian drone attack on Oct. 23 forced the plant to suspend some operations. A crude distillation unit (CDU) processing 80 MBPD was shut. Other units were affected as well. The refinery is the 4th largest in Russia, processing a total of approximately 309 MBPD. (Kyiv Independent)

Refining margins for 10ppm gasoil in Singapore climbed to their highest ($26.14 for the November Gasoil) since February 2024 on Monday on the back of the Russian sanctions, as per Quantum Commodities reporting.

ING writes :"The latest positioning data shows that speculators continued to cut their net long in ICE Brent, selling 57,085 lots over the last reporting week to leave them with a net long of just 52,521 lots as of last Tuesday. This was driven largely by fresh shorts entering the market." Thus the rally in oil prices seen Thursday into Friday was boosted by short covering, ING adds.

The Brent-Dubai spread remains under pressure amid the uncertainty over Russian oil trade following US sanctions. Indian refiners have reportedly been actively seeking alternative crude oil grades, largely from the Middle East. The spread has collapsed in recent days amid strength in the Middle East market.

Some uncertainty exists as to how much the proposed sanctions by the U.S. on Russian oil will actually come to pass. Central to the mammoth trade between Russia and China is the long-term contract between Rosneft and state-owned China National Petroleum Corp., which involves purchases of ESPO crude via pipelines to landlocked refineries in the northern Daqing region. It’s unclear, however, if these pipeline flows — about 800 MBPD — will be affected by the sanctions due to the government-to-government nature of the project. China imported 2 MMBPD from Russia in the first 9 months of the year. The U.S. government says that transactions with Rosneft and Lukoil need to "be wound down" by November 21. (Bloomberg)

Oil Price commentary, regarding the Russia sanctions, suggests that "over the longer term, oil will find a way as it always does." Kpler analysis says that "a complete halt of Russian oil purchases was unlikely." China and India have already been testing local currency payments for Russian oil. Chances are that this testing would accelerate thanks to the latest sanctions, which affect dollar denominated transactions. Oil Price adds: " The market may as well be betting on the fact that the U.S. president does not want oil prices to go much higher because he promised his voters he would keep fuel prices low. Perhaps this has something to do with the phrasing of the sanction declaration."  One veteran Russian oil analyst says :" the result (of the sanctions will)  be longer transit times, reluctant banks, and higher freight and insurance costs. “Eventually new ‘shadow’ channels will emerge,” she said, “but the adjustment will take longer and discounts will deepen.” One former US State department official says:" “But whether the move structurally reduces Russia’s oil sales in a durable fashion all comes down to the U.S. commitment to sustained, proactive enforcement of secondary sanctions.” (Bloomberg)

The Baker Hughes oil rig count rose by 2 units in Friday's report. Baker Hughes’ broader 2025 outlook remains unchanged, with a projected high single-digit decline in global upstream spending, Reuters reported. A Baker Hughes official says that early signs point to 2026 being another year of subdued activity and declining spending, before a gradual recovery begins, particularly in international and offshore energy markets.

Energy Market Technicals

Technically momentum for the energies remains positive, although the crude oil and RB contracts have failed to trade over the highs seen the prior 2 sessions. The distillates though have forged to fresh 4 month highs on the back of the suspension of operations at a large Russian refinery.

Spot WTI futures see support at 60.40 and then at 59.64. Resistance lies at 62.87-62.92.

Natural Gas Market Overview

Natural Gas --December NG is down 5.6 cents at $3.939
December NG is lower now after attempting to rally overnight. Strong production and a seasonally average weather outlook seem to be weighing on prices.

The Sunday evening strong opening in NG futures was likely helped significantly by the news of record LNG feed gas volume. LNG feedgas demand rose to a new record high of 17.3 BCF/d Saturday, up more than 4 BCF/d vs 2024. Celsius Energy added that "by Wednesday, below-average temperatures will cover the entire Gulf Coast. This makes liquefaction more efficient and, barring unscheduled maintenance, clears the way for feedgas to challenge 18 BCF/d." 

Meteorologists forecast temperatures across the country will remain mostly near-normal through November 8. (Reuters)

NatGasWeather said Friday that they see next week's EIA gas storage report as near or slightly above normal due to "strong wind generation" in the week ended Friday Oct. 24. Early estimates seen are calling for a build of 70 to 73.7 BCF. This compares to the 5 year average build of 69 BCF and last year's build of 79 BCF. The prospect heard is for the end of the month storage total to revert to a deficit versus last year. As of November 1 last year, storage stood at 3.931 TCF. Last week's storage data showed a total of 3.808 TCF in tank as of October 17.  

LSEG said average gas output in the Lower 48 states has fallen to 106.7 BCF/d so far in October, down from 107.4 BCF/d in September and a record monthly high of 108.0 BCF/d in August. This October natural gas production figure seen Friday was up 0.2 BCF/d from that seen 10 days prior. Last Thursday's gas production was seen at 109 BCF/d, as per Bloomberg data.

The Baker Hughes gas rig count was unchanged in Friday's report. The current rig count is up 20 rigs, 19.8% on the year.

The LN/NG November options expire tomorrow. Sizable open interest of at least 13,000 contracts ( and more) is seen in the whole strip of put options from $3.00 to $3.30. In the call options, the only nearby strike with any sizable open interest is the $3.25. The $3.50 strike --it is worth mentioning--has total open interest of over 63,000 contacts.

With only 3 sessions left until the November NG futures expire, we have shifted our technical outlook to December, which is now the most traded contract month. The high for the session was seen on the Sunday evening opening. Resistance for the December futures lies at the overnight high at 4.098-4.100 and then at 4.173-4.180. Support comes in at 3.867-3.869. There is a double bottom above that from Friday/ today at 3.910-3.911.

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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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