Written Commentary
Ag Market View for May 20.25
May 20, 2025
CRUDE OIL
The rally in May Crude Oil this week has stalled at the 50-day moving average. The market has drawn support from the Trump Administration’s announcement that the US would put at 25% tariff on imports from any nation that buys crude oil from Venezuela. Chinese purchases of Venezuelan oil have reportedly ground to a halt, and India’s Reliance Industries said they would halt Venezuelan oil imports as well. This and stepped up sanctions against Iranian oil tighten the global supply outlook, which offsets the potential bearishness the 25% tariffs on imported cars and light trucks, also announced this week. However, reports overnight that Saudi Arabia may cut prices to Asia for the third month in a row could limit further gains. Russian exports to Asia have reportedly recovered since the US issued new sanctions in January that had sent Asian buyers scrambling to find alternative sources. Russia and Ukraine do not appear to be observing their agreement to abstain from attacking each other’s energy infrastructure. Overnight Russia accused Ukraine of “virtually destroying” a key piece of Russian gas infrastructure in Sudzha, and a Ukrainian official said it was Russia that attacked the facility.
NATURAL GAS
May Natural Gas fell below the 50-day moving average yesterday in a dramatic fashion, but it managed to bounce off its lows and close back above the line and is holding those gains this morning. Indian government and industry sources told Reuters today that the Indian government is considering a proposal to end import taxes on US LNG to help cut the nation’s trade surplus with the US. This may help offset China’s 15% import tariff on US LNG that was announced last month. News overnight that a key Russian natural gas facility had been hit may offer some support today. Yesterday’s weekly EIA storage report showed US gas storage +37 billion cubic feet for the week ending March 21. At 1,744 bcf, US storage is -24.0% from a year ago and -6.4% below the five-year average.
PRODUCT MARKETS
RBOB is leading the complex high this morning, as it has punched through resistance at 50-day moving average and is approaching the 0.618 retracement of the selloff from the January high to the March low. May ULSD is lagging the complex despite US distillate stocks being near the low end of the five-year range. We are moving past the key heating season, and driving demand could be seeing a temporary bump from spring break travel.
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