Written Commentary
Ag Market View for May 20.25
May 20, 2025
CRUDE OIL
Crude Oil is higher this morning, as the truce agreement announce yesterday between Ukraine and Russia appears to be on softer ground than it did yesterday afternoon. The Kremlin said the Black Sea agreements would not come into effect unless links between some Russian banks and the international financial system were restored. And Ukrainian President Zelenskiy said his understanding was that the truce agreements did not require sanctions relief to come into force and would take effect immediately, calling the Kremlin’s statement an attempt to “manipulate” the deals. Even President Trump suggested that Russia could be trying to delay ending the war. The API report yesterday afternoon was bullish against expectations according to numbers quoted in Reuters. The report showed crude stocks -4.6 million barrels last week versus trade expectations for -1.0 million. Gasoline inventories were -3.28 million barrels versus -1.8 million expected, and distillate stocks were -1.35 million barrels versus -1.6 million expected. Chinese oil traders told Reuters yesterday they were waiting to see how the Trump Administration’s order to tariff countries that buy crude oil from Venezuela would be implemented and whether Beijing would direct them to stop buying. In the meantime, they will refrain from buying any April shipments. On Monday the Trump administration did extend its deadline for Chevron to wind down its operations in Venezuela to May 27.
NATURAL GAS
May Natural Gas is has fallen its lowest levels since March 3 this week off record domestic output and expectations for lower heating demand, but the market has bounced off the 50-day moving average this morning after falling 23% from its March 10 peak. The latest 6-10 and 8-14 day forecasts show a warming trend, with above normal temperatures moving over most of the US, with the exception of some below normal temps in Northern California and the Pacific Northwest. LSEG says average output in the lower 48 US states have reached 106.0 billion cubic feet per day so far in March after from a record 105.1 bcfd in February. Gas flows to the eight big US LNG export plants rose to an average of 15.7 bcfd so far in March from a record 15.6 bcfd in February. LSEG expects average gas demand to fall from 107.0 bcfd this week to 102.7 next week.
PRODUCT MARKETS
API gasoline stocks were -3.28 million barrels last week versus -1.8 million expected, and distillate stocks were -1.35 million versus -1.6 million expected. May RBOB punched through resistance at the 100-day moving average overnight, leaving additional resistance at 2.2368 and 2.2580.
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