Written Commentary
Ag Market View for May 20.25
May 20, 2025
CRUDE OIL
March Crude Oil is higher this morning, having bounced off the 100-day moving average overnight. The US Treasury said yesterday that is was imposing new sanctions on a few individuals and tankers helping to ship millions of barrels of Iranian crude per year to China. President Trump repeated a pledge to raise US oil production yesterday, but industry executives have indicated that production increases may grow more slowly this year than in the past. The Vice President of crude oil supply and trading at Chevron told a conference in Houston yesterday that she expects Permian output to continue to grow but at a more moderate pace than previously. Chevron’s Permian production reached 992,000 barrels (of oil equivalent) per day in the fourth quarter, which is close to their 1 million bpd target. Their production rose 14% last year, but they expect 9-10% increases the next couple of years. Chevron’s CEO said he believes Permian operators will keep capital spending modest and grow within their means. A Liberian-flagged oil tanker sailed through the Red Sea this week, one of the first voyages since the Houthi rebels said that they would limit attacks in the wake of the Gaza ceasefire.
NATURAL GAS
March Natural Gas is mostly steady this morning. It has tested yesterday’s two-week high but has yet to push thorough it. Yesterday’s EIA report was supportive, with storage for the week ending January 31 at 2,397 bcf, which was down 174 bcf from the previous week and at the bullish end of expectations calling for draws of 182 to 138. Storage is now down 7.2% from a year ago and 2.9% below the five-year average, versus down 3.3% and 2.6% below for the previous week. Over the past few weeks, US gas storage has fallen below year ago and average levels for the first time in two years. Dutch and British gas prices were near 15-month highs today, drawing support from colder weather and low storage levels in Europe. According to data from Gas Infrastructure Europe, Europe’s gas stocks are currently 50.6% full. The NWS 6-10-day forecast shows colder than normal temperatures dominating much of the US except for the southeast, but 8-14-day has less cold and more warmth, especially in the southern half of the nation. World Weather Service this week raised the possibility of cold weather in the eastern United States late this winter or in early spring.
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