Daily Energy Market Update September 18, 2025

Liquidity’s Daily Market Overview

Crude oil prices are higher now and well off the overnight low as the market is reacting positively to the Federal Reserve's rate cut and the large draw in crude supplies seen in the DOE data yesterday.  U.S. equities have reacted positively to the interest rate cut. The Dow Jones index is at a record high.

The Federal Reserve cut the Fed Funds and Discount rates by 25 basis points Wednesday. They set the Fed Funds range at 4.00-4.25%. They see the median for Fed Funds at 3.6% at the end of 2025, thus signaling possibly 2 more rate cuts this year. The Fed wrote in their announcement :" "Job gains have slowed, and the unemployment rate has edged up but remains low."  The rate cut was the first cut since December and moved rates to their lowest level since December 2022. (investopedia) Energy prices were lower overnight as the Fed’s warning of risks to the labor market added to market concerns regarding the strength of energy demand given the increase in US tariffs this year, as per Market News commentary.

The DOE data seen Wednesday showed a very, very large draw in crude oil inventories of 9.285 MMBBL as crude exports rose by 2.532 MMBPD. Were it not for the EIA's crude supply adjustment adding over 1 MMBPD, the crude oil draw would have been even larger. Demand for crude fell somewhat though, as the crude input to refinery number fell by 394 MBPD this week to 16.424 MMBPD, which is the least amount of crude inputs since the week ended May 23rd. Refinery utilization fell more than expected by 1.6% to 93.3%. Midwest crude processing fell to the lowest since May as Valero and Flint Hills started maintenance. (Market News) The distillate build of just over 4 MMBBL looks to be largely a function of distillate exports dropping by 543 MBPD on the week. This is offset though by distillate demand rising on the week by 244 MBPD and the distillate production showing a drop of 374 MBPD. Distillate demand, despite rising on the week, still lagged that seen in the prior 2 years by 177 and 545 MBPD. Gasoline demand on the week rose by 302 MBPD to 8.810 MMBPD, beating the past 2 years' demand by 34 and 400 MBPD.

Russia’s weekly seaborne crude shipments fell by 934 MBPD in the week to Sep. 14 to 3.18 MMBPD driven by a drop in Baltic loadings amid drone strike on regional facilities, according to Bloomberg.

The key Mideastern hub of Fujairah has seen oil product inventories fall to a record low, driven by significantly reduced fuel oil supplies from Iraq and a substantial draw in middle distillates. Middle distillates include diesel fuel and heating oil. Total inventories dropped by 18% week-on-week to 13.1 MMBBL, reaching their lowest point since records began. This decline is compounded by firm outflows of refined products from Fujairah to Asia and other markets.  A major contributing factor is the sharp reduction in fuel oil supplies from Iraq, with August flows being the weakest since late 2020.  Fujairah has seen firm exports of refined products to regions including Northern Europe, Asia-Pacific, and Africa, which helps deplete local stockpiles. The figures were compiled from data from the Fujairah Oil Industry Zone and S&P Global Insights.

Energy Market Technicals

Momentum is positive for the energies basis the November daily charts.

WTI for November sees support at the overnight low at 63.11-63.13. Below that support lies at 62.32-62.38. Resistance comes in at 64.60-64.62 and then at 65.43-65.49.

Natural Gas Market Overview

Natural Gas--NG is down 3.8 cents
NG spot futures are lower as the market is expecting a somewhat bearish EIA storage number this morning. Also a slightly lower demand forecast for end of September weighed on prices late yesterday and into the overnight.  Additionally, U.S. gas production has ticked up today.

U.S. gas production is seen at 107.2 BCF/d, up from yesterday's output of 106.1 BCF/d, but down from the 30 day average of 108.43 BCF/d, as per Bloomberg data.

The Henry Hub next day cash natural gas was quoted 3.190 / 3.240 early Wednesday morning, with a trade then seen at 3.220. This is versus October futures at the time printing 3.146 / 3.151. This thus flipped the cash to a roughly 7 cent premium to the futures, which is up from the past few sessions, in which we saw the differential valued at flat. But, Balance of the Month (Balmo) cash prices were quoted only up 1.5 cents on the day, versus the Henry Hub next day cash being up 11 to 13 cents. Thus, we conclude that the market by valuing the Balmo only slightly higher was discounting next day cash staying strong and seeing other factors that are believed to weaken cash prices going forward, such as the EIA data due out today.

The EIA gas storage data due out this morning is seen as a build of 78 to 80 BCF as per new wire surveys. This is versus last year's build of 56 BCF and the 5 year average build of 74 BCF.

U.S. natural gas producers will face challenges meeting surging demand from new LNG export projects, according to Expand Energy's CEO, cited by Platts. He warned that the U.S. industry is not fully prepared for the expected 12.2 BCF/d increase in LNG export capacity by 2027. This would bring total capacity to 27 BCF/d — a 12% rise in overall US gas demand. Feedgas demand has already climbed to 16.1 BCF/d and is forecast to hit nearly 22 BCF/d by 2027.

In a reversal of what was seen last week, the October futures contract on the CME was the only month to settle lower Wednesday in front of the February 2027 contract. 

Technically the rally seen earlier in the week has caused the DC chart's momentum to turn positive, although for now price action looks to have created a trading range. Upside resistance comes in at yesterday's high at 3.165-3.168. Above that resistance lies at 3.198-3.199. Support lies at 3.051-3.056, which is being tested as we type. Below that support comes in at 3.021-3.022.

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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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