Daily Energy Market Update 2-26-2025

Crude is up 12 cents????? April RB is down 1.05 cents?????? April ULSD is down 3.51 cents

Overview

Crude oil is higher, but the products are lower, led by the HO. API statistics disappointed for the products as they built versus estimates for draws. Also the news the past day or more has been bearish. Pressure has come from a possible peace in Ukraine, which brings up the possibility for easing of Russian sanctions, talk of a restart of Iraqi crude flow on the Kurdish pipeline, tariff concerns, and disappointing U.S. consumer confidence data.

API??????????????? Forecast????????? Actual

Crude Oil???? +1.4/+2.6????????? -0.64

Gasoline??????? -0.6-0.7????????? +0.537

Distillate???????? -2.0??????????????? +1.109

Cushing?????????? n/av????????????? +1.182

Runs?????????????? -0.3%??????????????? n/av

ING commentary suggests that last week’s output disruptions in North Dakota might have contributed to the crude oil stock decline.

Yesterday saw U.S. consumer confidence register its biggest monthly decline since August 2021 as inflation fears take hold. The index fell for the third-straight month and saw the largest monthly decline since August 2021. About three-quarters of those surveyed across the country said they plan to reduce their spending, citing uncertainty in the economy.(CNN)

The U.S. is urging for a 'quick' restart on the Iraq-Turkey crude pipeline. Iraq is preparing to resume up to 400 MBPD of exports of Kurdish crude via Turkey’s Ceyhan port after a two-year suspension, reportedly with pressure from the Trump administration. These supply boosters could be offset, analysts say, by sanctions on Iran and Venezuela. Trump has expressed a desire to cut Iranian crude exports to zero by resuming his “maximum pressure” campaign enacted during his first term. (Platts)

Prospects for a peace deal between Russia and Ukraine are improving, analysts are saying. This would take us a step closer to Russian sanctions being lifted, removing much of the supply uncertainty hanging over the market, the analysts added. The U.S. and Ukraine agreed terms of a draft minerals deal central to U.S. President Donald Trump's efforts to bring a swift end to the war in Ukraine, sources familiar with the matter told Reuters on Tuesday. Although this morning, President Zelensky of Ukraine characterises the deal as a "framework" noting that an additional agreement to set up a fund will follow.? Zelensky says he will discuss the "possibility to use Russia's frozen assets for mining resources development, weapons purchase, reconstruction."?? Added is this headline from Reuters seen now : "? WHITE HOUSE OFFICIAL: IF ZELENSKIY SAYS MINERALS DEAL ISN'T FINALIZED, I DON'T SEE WHY AN INVITATION TO MEET TRUMP MAKES SENSE” –

Weakness in energies has been tied to indications from President Trump that tariffs on Canada and Mexico would take effect next week after the conclusion of a 30-day pause. The tariffs would include a levy of 10% for Canadian energy products, but have stoked fears over a potential drag on the economy. (Dow Jones)

Refined product inventories at the UAE’s Port of Fujairah climbed to their highest in 36 weeks, bolstered by builds in middle distillates and light products, according to Fujairah Oil Industry Zone data published Feb. 26. Middle distillates include diesel fuel and jet fuel. As of Feb. 25, the Asian jet fuel market has been softening, due to expectations of looser supply on the back of uncertainties surrounding China's export levels, as per Platts commentary.

Technicals

The energies have fallen to their worst value in weeks and as such technically they are testing their lower bollinger bands. The RB and WTI have mean reversion set ups, having settled below their lower bollinger bands yesterday. Momentum is negative for the energies.

WTI spot futures have support at 68.42-68.44 and then at 67.71-67.72. Resistance lies at 70.75 and then at 71.26. The lower DC chart's bollinger band intersects at 68.99.

April RB sees support at 2.1941-2.1963 and then at 2.1779-2.1795. Resistance lies at 2.2261-2.2283 and then at 2.2503-2.2508. The lower bollinger band on the daily chart lies at 2.2109.

ULSD for April sees support at 2.2870-2.2898 and then at 2.2566-2.2573. Resistance lies at 2.3392-2.3403 and then at 2.3586-2.3595. The lower bollinger, which has been tested overnight,?lies at 2.3070.?

Natural Gas--April NG is down 9.3 cents

NG prices are lower today versus settlement after yesterday's late day rally, which some attribute to position squaring ahead of today's March futures expiration. Today's pullback is said to be due to the spring-like weather being seen in much of the U.S.

A comment from NGI suggested that yesterday's rally lacked fundamental support. This is possibly due to the slightly weaker feed gas volume seen versus last week's record level and a weaker demand forecast for next week. Additionally current demand is much lower than that seen last week as spring like weather is being seen in much of the U.S.

LNG export feed gas demand is seen at 15.62 BCF/d today as per Bloomberg data. This is down from last week's record level of 16.4/16.5 BCF/d.? Today's lower 48 natural gas demand is down below five year seasonal average levels at 83.2 BCF/d as temperatures have recovered from the cold last week. Last Thursday lower 48 natural gas demand was 129.8 BCF/d.?

TTF European gas has fallen to its lowest value since mid-December. ING commentary describes the reasons for the TTF falloff :" The US-Ukraine minerals deal contributed to downward pressures. German utilities are calling for storage target rules to be eased ahead of next winter. This would reduce demand for gas storage through the injection season. Utilities favor lowering the storage target for 1 November from 90% to 80%. In addition, storage levels have been falling at a slower pace in recent days amid milder weather conditions. EU gas storage is a little over 40% full, down from 64% at the same stage last year, and below the 5-year average of 51%. However, this 5-year average is inflated by the milder winters seen in 2022/23 and 2023/24, along with Covid impacts in 2020."

Technically there are 2 elements we see that may lend support to the TTF price at this time. The contract is testing the lower bollinger band and momentum is getting oversold. The attached chart is for the April TTF contract as the March TTF futures expire tomorrow.

The EIA natural gas storage data due out tomorrow is seen as a draw of 265 to 272 BCF. This compares to last year's draw of 86 BCF and the 5 year average draw of 141 BCF. Platts says that the forecasted draw would be the tenth largest on record dating back 15 years to the inception of the EIA’s five-region storage model. Year to date, withdrawals from US gas storage have already totaled over 1.3 TCF, or about 270 BCF more than the five-year average, Platts adds. One analyst adds that : " With storage deficits to approach 300 BCF vs. the five-year average… natural gas futures may stay elevated until the market is better assured of an adequate summer supply outlook,”.

Notable on the CME in Tuesday's trading is the large open interest increase in the July, September and October put options. In the July and October options, the same strikes saw large increases, but differing strategies. The July $2.50 put was bought against which the $3.00 put was sold, earning 1.5 cents with delta futures sold at $4.38. In the October options, the reverse strategy was executed. Here the $3.00 put was purchased and the $2.50 put sold at a cost of? 3.9 cents with delta futures bought at $4.42. In the September put options, we saw a butterfly executed. The $4.05 put was bought at a cost of 35.3 cents, twice the amount of $3.75 puts were sold collecting 22.4 cents for each option sold, and the $3.25 put was bought for a cost of 9 cents. Thus, the purchaser of the wings collected 0.5 cents.?

Today is the last trading day for the March NG futures. The March futures continue to hold a premium to the next day Henry Hub (HH) cash price. HH is quoted $3.86/$3.91--versus March futures printing $4.059.?

Technically, the April NG has negative momentum despite the rally seen yesterday. That rally saw the gap to 4.148 on the DC chart filled. April futures have support at 3.966-3.968. Resistance lies at 4.133-4.135 and then at the overnight high at 4.169-4.175.

Disclaimer

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