Written Commentary
Global Ag News For May 21.2025
May 21, 2025
CRUDE OIL
June Crude Oil was lower for the fourth straight session overnight and was approaching its post-tariff selloff low of 54.57. Reports that Saudi Arabian officials are telling allies that the kingdom is unwilling to prop up oil prices with further supply cuts, and that it can handle a prolonged period of low prices, suggested that they will stop playing the role of swing producer and will boost production in pursuit of market share. OPEC+ are scheduled to meet next week to discuss June quotas, and there have been reports that several members will press for another large rollback in the manner of the 411,000 barrel per day increase that is scheduled for May. Yesterday’s EIA report was bullish against expectations, but that did little to support the market. Net crude imports declined last week because exports increased and imports were slightly lower. The unexpected decline in first quarter US GDP and disappointing April ADP nonfarm payrolls also undercut support for crude oil, as this pointed to lower demand. US equity markets sold off in the wake of the reports but then recovered to close higher on the day and were higher again overnight. This could limit the downside in crude oil today, but if Saudi Arabia is truly abdicating its role as swing producer, this could spark a more significant selloff. Previous abdications have not ended well for the market.
NATURAL GAS
June Natural Gas was higher overnight following its selloff yesterday, but it came up short of taking out Tuesday’s high. For the EIA storage report today, a Reuters poll of analysts has an average expectation of +107 bcf for the week ending April 25, with a range of expectations of +93 to +120. The five-year average for this week is +55 bcf, with a five-year range for the week of +15 to +77, so an injection of 107 bcf would be unusually large. As of last week, storage was down -20% from a year ago and -2.8% below the five-year average. There were 59 total degree days (TDDs) last week, compared with the 30-year normal of 77 for the period, according to data from LSEG. The 6-10 and 8-14-day forecasts call for above normal temps over the northern half to two-thirds of the lower 48 and near or below normal in the south, neither of which point to strong heating or cooling demand ahead. The average amount of gas flowing to the eight big liquefied natural gas (LNG) export plants operating in the US reached a new record of 16.0 bcfd in April, up from a previous record of 15.8 bcfd for March to 16.0.
PRODUCT MARKETS
The weekly EIA petroleum stocks report was bullish for and gasoline and neutral for diesel, but that only provided fleeting support to those markets, as the market was undermined by disappointing economic data and the prospect of increasing production from OPEC+ members. Implied gasoline demand was down from the previous week but ahead of a year ago. June RBOB fell to its lowest level since April 11 overnight, leaving next support at 1.9981, followed by 1.9287.
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