Written Commentary
Ag Market View for May 20.25
May 20, 2025
CRUDE OIL
Crude oil was higher overnight in reaction to the news that certain electronic devices will be exempted from the retaliatory tariffs, but mixed messages from the Trump Administration about new tariffs undercut that support. Ideas that the global economy will suffer from a protracted trade war between the US and China have lowered demand expectations for oil this month. China imported 51.41 million metric tons (12.1 million barrels per day) of crude oil in March, according to data from China’s General Administration of Customs. This was up from 11.55 million bpd in March 2024 and the highest since August 2023. This was supported by a jump in imports from Iran. The Baker Hughes rig count showed US oil rigs in operation were down 9 rigs to 480 last week. This was down from 506 rigs a year ago and below the five-year average of 498. US Energy Secretary Chris Wright said on Friday that the United States could stop Iranian oil exports as part of Trump’s plan to pressure Tehran over its nuclear program. Reuters reported that it was told Kazakhstan’s oil output fell in the first two weeks of April from the March average, but it was still above their OPEC+ quota. The energy ministry admitted last week that they had exceeded their OPEC+ quota in March but would fulfil their commitments in April and partially compensate for earlier overproduction. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 25,160 contracts of crude oil for the week ending April 8, reducing their net long to 69,463.
NATURAL GAS
Natural gas prices drew some support in Europe overnight off optimism from the US exemptions for electronic goods, like other energy markets, it remains on edge from the uncertainty. The Baker Hughes rig count showed US natural gas rigs in operation were up 1 rig to 97 last week. This follows a 7-rig decline the previous week. It is down from 109 rigs a year ago and below the five-year average of 120. The 6-10 and 8-14 forecasts for the lower 48 US states show a mix of above normal temperatures for the eastern two-thirds and normal to below normal out west, which could keep storage increasing at a faster than normal pace. As of Friday, LSEG was forecasting average gas demand in the Lower 48, including exports, to fall from 108.3 bcfd last week to 100.1 bcfd this week and 97.8 bcfd in next week. The average amount of gas flowing to the eight big LNG export plants operating in the US have reached 16.1 billion cubic feet per day so far this month, up from an all-time high of 15.8 bcfd in March. China’s natural gas imports, including piped gas and LNG, totaled 9.16 million metric tons in March, down 15% from a year earlier. First-quarter imports totaled at 29.42 million tons, were down 10% from 2024. Companies have refrained from bringing in US LNG due to Beijing’s punitive, retaliatory tariffs. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 5,552 contracts of natural gas for the week ending April 8, reducing their net long to 19,519
PRODUCT MARKETS
Like crude oil, the products are finding tentative support from the exemptions posited on Friday but not fully enthusiastic because of uncertainty over Administration’s next move.
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