Written Commentary
Ag Market View for May 20.25
May 20, 2025
CRUDE OIL
April Crude Oil is higher this morning, finding support from the Ukrainian drone strike on a Russian oil pipeline over the weekend and from a slowdown in North Dakota production due to the cold weather. In Russia, the Caspian Pipeline Consortium said the strike could reduce oil flows by 30-40%. A 30% cut would equate to the loss of 380,000 barrels per day (bpd) of market supply, according to Reuters. An official from Kazakhstan said the nation will seek contact with Ukraine in order to avoid another strike. On Tuesday, the North Dakota Pipeline Authority said oil production was estimated to be down 120,000-150,000 barrels per day as of Tuesday morning, due to the recent extreme cold and related operations challenges. North Dakota is the third-largest oil-producing state in the United States. Bloomberg reported that OPEC+ is considering pushing back a series of monthly supply increases that are due to begin in April, citing interviews with delegates. Israel and Hamas will begin indirect negotiations on a second stage of the Gaza ceasefire deal, officials said on Tuesday, as the Palestinian militant group said it would hand over more hostages this week. Negotiations were supposed to start on February 4. The EIA report will be delayed until Thursday at 11:00 AM Central due to the holiday on Monday.
NATURAL GAS
April Natural Gas extended yesterday’s rally overnight to trade to its highest level since November 2022. The nearby contract reached its highest level since January 13, which was a two-year high. Extreme cold in the US this week is expected tighten US supply even further. A Reuters poll is calling for the US storage report tomorrow to show a withdrawal of 193 to 185 bcf last week. The five-year average withdrawal for the week is 130 bcf. As of last week’s report, supply was down 9.3% from a year ago after being 1.1% higher at the beginning of the year. The 6-10-day forecast shows above and much above normal temperatures in the western half of the US with mostly normal east (except for the southeast which is below normal). The 8-14 day shows warmer than normal west but colder weather moving in from New England to the eastern Midwest and Appalachian and mid- Atlantic regions.
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