Written Commentary
Global Ag News For May 21.2025
May 21, 2025
CRUDE OIL
June Crude Oil is near unchanged this morning and is trading in a relatively narrow range after a volatile week. China raised its tariffs on US goods to 125% overnight, but so far the reaction has been minimal. The Dallas Federal Reserve conducted a survey of over 100 oil and gas companies in the Texas, New Mexico and Louisiana region, which indicated that oil producers need a price of $65 per barrel on average to profitably drill. The research firm Rystad Energy and Wood Mackenzie put the average break-even price of developing a new wells in the US at just under $48 a barrel, but they also said the price rises to over $60 a barrel once dividend payments, debt repayments, corporate expenses and other costs are included. A Reuters poll of 57 economists put China’s gross domestic product growth in the first quarter at +5.1% year-on-year, down from +5.4% in the fourth quarter of 2024. They look for total 2025 growth to fall to +4.5% from +5.0% in 2024. China’s oil imports from Iran are estimated at 1.7-1.8 million barrels per day for March, which is reported to be at or close to an all-time high. Inventory levels reported to be very high in the independent refining hub Shandong province, and some have suggested that imports will slow down this month. The Trump administration imposed new sanctions on Iranian oil trading networks yesterday, including on a China-based crude oil storage terminal linked via a pipeline to an independent refinery. US special envoy Steve Witkoff is scheduled to meet with a senior Iran leader on Saturday in Oman to discuss Iran’s nuclear program.
NATURAL GAS
May Natural Gas s slightly lower this morning, possibly due to a warmer US weather forecast. The International Energy Agency (IEA) said today that European LNG imports are expected to increase by 25% in 2025. Imports have already increased by 23% so far this year, due lower pipeline supply from Russia, higher domestic demand, storage injection needs, and greater exports toward Ukraine. The agency is forecasting gas demand in Europe to increase by 1.5% from to 2024, due rising demand in the residential and commercial sectors. The EIA Gas storage report yesterday showed a net injection of +57 bcf for the week ending April 4, which was above the average expectation of +50 and towards the upper end of the range (+44 to +58) and well above the five-year average change for the week at +24 bcf. At 1,830 bcf, storage was -19.8% from a year ago and -2.1% below the five-year average versus -21.5% and -3.9% the previous week. The deficit continues to narrow as injections come in above average. The forecast has warmed up a bit for the eastern half of the lower 48, with the 8-14 day showing the area of below normal temperatures shrinking to New England and eastern New York, eastern Pennsylvania and New Jersey and above normal temperatures dominating most of the US.
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