Written Commentary
Ag Market View for May 20.25
May 20, 2025
CRUDE OIL
Demand Uncertainty Emerges
May Crude Oil was inside yesterday’s range up action overnight, as the market assessed the 25% US tariffs on automobile imports announced yesterday. In some regard this could support oil consumption on ideas that increasing automobile costs would slow the move towards more fuel-efficient vehicles. However, the tariffs in general raise concerns about overall demand. The EIA report yesterday was positive for crude oil with stocks down 3.3 million barrels last week versus -1.0 million expected. Gasoline and distillate stocks declines were smaller than expected. That being said, crude and distillate stocks are at the low end of the six year range for this time of year, while gasoline stocks are relatively high. Executives surveyed by the Dallas Fed expressed worries about President Trump’s promise to drive down oil prices and said that his trade and tariff policies could raise drilling costs. The Trump Administration’s order to tariff countries that buy crude oil from Venezuela has put a chill on Venezuelan oil sales.
NATURAL GAS
May Natural Gas fell below support at the 50-day moving average overnight and traded to its lowest level since February 14, but it has since recovered to unchanged on the day. For the EIA storage report today, the Reuters poll shows an average expectation of +25 billion cubic feet last week (range +6 to +38). The five-year average change for the week is -24 bcf. If correct, this would put storage for the week ending March 21 at 1.732 trillion cubic feet, about 24.7% below the same week a year ago and around 7.1% below the five-year average for the week. The 6-10 and weather forecast looks a bit cooler today than yesterday, with an area of below normal temperatures extending eastward from the west coast into the northern plains. Warmer than normal temps prevail in the southeastern US up into the Central Plains, the eastern Midwest, and the eastern Great Lakes. LSEG says there were 103 heating degree days last week, compared with the 30-year normal of 122 for the period.
PRODUCT MARKETS
RBOB is following crude oil this morning, as the tariffs on automobile imports may slow the move towards more fuel efficient vehicles but may also put new car purchases out of reach for some consumers, which could slow gasoline consumption overall. The EIA Report yesterday showed US gasoline stocks fell less than expected, and US gasoline stocks at 239.128 million barrels are above 232.072 million a year ago and above the five-year average of 233.831 million. US distillate stocks are relatively tight at 114.362 million barrels versus 117.337 million a year ago and the five year average of 122.709 million. However, US jet fuel demand fell by 431,000 barrels-per-day (bpd) to 1.41 million bpd last week, the lowest since February 2024. It was the biggest week-over-week decline in demand since December 2023.
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