Written Commentary
Ag Market View for May 20.25
May 20, 2025
NATURAL GAS
July Natural Gas is higher this morning and is close to taking out the 100-day moving average. Yesterday’s EIA storage report showed supply increased slightly more than expected last week, and total storage was back above the five-year average for the first time since January 17. Storage was +104 bcf from the previous week versus +102 expected. The five-year average change for this week is +82. Storage was down -16.5% from a year ago and 0.9% above the five-year average versus -17.8% and -0.2% the previous week. Officials from Washington and Moscow have reportedly held discussions about the US helping to revive Russian gas sales to Europe. This could pressure US LNG export demand, which has been running strong growth since the start of the Russia/Ukraine war. On the other hand, the US could see more LNG demand from US trade partners interested in reducing their trade surpluses to get lower tariff rates. The 6-10-day forecast shows above normal temperatures from the US Great Plains to the east coast, with much above normal temps in the upper Midwest and Great Lakes. This could contribute to a boost in cooling demand, which would support natural gas usage for electrical generation. Below and much below temperatures forecast out west could support heating demand.
CRUDE OIL
Crude Oil broke through its Wednesday-Thursday highs overnight and traded to its highest level since April 29. The market has turned upbeat in advance of the US Treasury Secretary’s meeting with China’s top economic official tomorrow. Of course, there is a risk of disappointment with the outcome, but expectations for a major breakthrough are probably low, and anything but a total breakdown could be viewed positively. A Reuters survey put OPEC oil production for April at 26.6 million barrels per day, down from 26.63 million in March. The biggest drop was from Venezuela, which fell from to 760,000 bpd from 860,000 bpd in March, as cargo cancellations to Chevron forced ships to return. China’s April crude oil imports were estimated at 11.69 million barrels per day in April, down from 12.1 million in March but up from 10.88 million bpd in April 2024. Oil and gas drilling permit applications in Texas fell to 570 in April, down from 795 in March and their lowest since February 2021, according the consultancy Enverus, as producers worried that increasing OPEC+ production and lower demand would push crude oil prices even lower.
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