Daily Energy Market Update October 28,2025

Liquidity’s Daily Market Overview

Energies are lower as global surplus supply concerns resurface. Also some doubts about the effectiveness of sanctions against Russia is easing the upward pressure that last week's announcement caused. Furthermore, OPEC has signaled its willingness to increase production if necessary. Additionally, while US-China negotiations continue, no real outcome has been agreed as of yet.

Sanctions on oil-exporting countries could push up crude prices, but the effect will be limited because of surplus capacity, the IEA's Executive Director said on Tuesday. He added that : "The oil and gas markets will enter a very distinct period, which is in the absence of major geopolitical tensions, we are going to see lower oil and gas prices."  (Reuters)

Adding to the easing worries over supply is the news that OPEC+ is seen raising output at their meeting this coming weekend. Although they are said to be considering an increase of only 137 MBPD for December production, the news seemed to allay supply fears somewhat. (WSJ)

Yesterday, the ULSD and Gasoil futures contracts were very strong as Russian sanctions worries hit this sector especially hard. ING commentary says: "The latest sanctions on Russia threaten diesel flows, as Russia exports around 1 MMBPD of diesel fuel. So clearly, a significant amount of supply is at risk. Furthermore, there is also the risk that Indian refiners reduce run rates if they stop buying Russian oil. This would lead to lower middle distillate export volumes from India. In addition, the Ukrainian president has said that Ukraine will increase the scale of attacks on Russian refineries, posing further supply risks to the middle distillate market. "  Indian refiners have not placed new orders for Russian oil purchases since sanctions were imposed, as they await clarity from the government and suppliers, sources told Reuters on Tuesday.

Yet, some of the worries over Russian sanctions have been allayed by the fact that Russia has been selling its oil in local currencies to its buyers, thus reducing the exposure to dollar denominated US sanctions.  Russia now conducts most of its transactions in rubles or other "friendly" currencies, Societe Generale Research says in a note. (WSJ)

Russian oil major Lukoil says it is selling its international assets in response to sanctions imposed by the U.S. Lukoil has stakes in oil and gas projects in 11 countries. It has refineries in Bulgaria and Romania and a 45% stake in a refinery in the Netherlands. The sanctions make it difficult for Lukoil and Rosneft to do business outside of Russia. In addition to barring U.S. businesses from dealing with the two companies, the sanctions carry the threat of secondary sanctions on foreign banks that handle their transactions.  (ABC News)

Some skepticism remains over US/China trade talks. As CNN commentary reads: " it’s still hard to take any progress between Trump and Xi too seriously, considering both sides have alleged the other violated prior deals." CNN adds: "Just last week, U.S. trade representative Greer opened an investigation into whether China is adhering to the terms of a trade agreement Trump brokered during his first term. As part of that agreement, China committed to increasing purchases of American products by $200 billion by the end of 2021. However, it fell far short of that level.

Energy Market Technicals

Momentum remains positive for the energies, but the crude oil and RB contracts are well below the highs seen in the prior 3 sessions.

WTI spot futures see support at 59.64 and then at 59.00. Resistance lies at 61.67-61.69 and then at 62.17-62.20.

Natural Gas Market Overview

Natural Gas ---December NG is down 13.2 cents at $3.865
NG futures are lower as moderating temperatures, ample storage and continued stout production weigh, despite recent record volume for LNG export.

LSEG said Monday that average gas output in the Lower 48 states has fallen to 107.0 BCF so far in October, versus the record high from August of 108.0 BCF/d. Yet, on October 14, LSEG said that output had averaged 106.5 BCF/d so far in October. On a daily basis, output has held near a three-week high of around 108.0 BCF/d over the past four days. That compares with a daily record high of 109.2 BCF/d on July 28. (Reuters)

On a daily basis, LNG export feedgas hit an all-time high of 17.4 BCF/d on Sunday, topping the prior record of 17.3 BCF/d on Saturday, with flows to Venture Global's  Plaquemines plant in Louisiana at a record 3.9 BCF/d. (Reuters)

On Monday, LSEG projected average gas demand in the Lower 48 states, including exports, would rise from 108.7 BCF/d this week to 109.4 BCF/d next week. These forecasts were up a total of 1.8 BCF/d from those seen Friday.

The notion of ample gas in storage is underscored by NGI reporting that storage is on pace to rise to 3.925 TCF as of Nov. 1. They say that the average median Nov. 1 Lower 48 storage balance between 2010 and 2024 was 3.809 TCF.

OECD European natural gas demand is expected to contract by 8%--10% from 2024 to 2030, the IEA said Oct. 27. The vast majority of the expected demand drop is forecast to come from the power sector. Regardless of lower LNG prices, OECD Europe is expected to see a 25% dive in gas-to-power demand by 2030 compared to 2024, removing some 30 Billion Cubic meters ( 1.059 TCF)  of need, the IEA said. "This is largely driven by the rapid expansion of renewable power output, which is forecast to increase by more than 40% by 2030."  Additionally, plant closures will put downward pressure on industrial demand. (Platts)

The November LN options expire today. The $3.25 strike has a total open interest on the CME of over 46,000 contracts. The strikes in the put options from $3.10 to $3.30 have open interest of anywhere from 14,357 to 30,933 contracts. The $3.40 puts have 10,959 contracts open. 

Notable from Monday's settlements in NG futures is the November contract rising 13.8 cents, while the rest of the winter strip from December to March settled anywhere from down 2 ticks to up 9 ticks. This is likely due to the next day Henry Hub cash being near $3.40, thus keeping November futures near there, while the rest of the winter strip seems weighed down by ample storage and stout production, as well as a moderation in temperatures for the Nov 3 through 8 period, as per Celsius Energy reporting.

Technically, December NG futures has seen its momentum turn downward. Support is seen at 3.867-3.869, which was tested with today's low of 3.854. Below this support is seen at 3.827-3.830. There is a gap below from 3.829 to 3.748. Resistance is seen at 3.982-3.985, which is the overnight high. Resistance is then seen at 4.022-4.023.

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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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