Daily Energy Market Update 2-5-2025

Crude is down 67 cents???? RB is down 2.71 cents???? ULSD is down 1.66 cents

Overview

Energies are lower today, pressured by a sharp increase (+5.025 MMBBL) in crude supplies and gasoline supplies (+5.43 MMBBL) seen in the API data and by the ongoing Sino/U.S. tariff spat. The retreat in prices today comes even as the Trump administration has signaled a push to exert "maximum pressure" on Iran, which some say could ultimately lead to a loss of as much as 1 MMBPD.?

The energies rallied mid-morning Tuesday as Trump was expected to sign an executive order later Feb. 4 restoring his so-called "maximum-pressure campaign" against Tehran with a goal of driving Iranian crude exports to zero, according to multiple reports on the social media platform "X". During his first term, the Trump White House pursued a maximum-pressure campaign that drove Iranian crude output to as low as 2 MMBPD. Iran produced 3.22 MMBPD of crude in December, according to the latest Platts OPEC+ Survey from Commodity Insights. The maximum-pressure campaign is likely linked to the China tariff move, said Price Futures Group analyst Phil Flynn. The pressure on Iran would lead to higher crude prices for China, which is Iran's biggest oil buying customer. (Platts)? China buys more than 90 percent of Iran's oil exports. (NY Times)

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

Crude Oil?????+1.3/+3.4??????????? +5.025

Gasoline??????? -0.35/+0.5???????????? +5.43

Distillate???????? -1.5/-2.9????????????? -6.979

Cushing??????????? n/av?????????????????? +0.110

Runs??????????????-0.2/+0.3%??????????? n/av

Norway’s Equinor has resumed production at its Johan Sverdrup field following a power disruption this week the company said.

Goldman Sachs says that Chinese/U.S. tariffs are priced into the energy market at present. They also see a recent increase in the amount of Russian and Iranian crude oil barrels stored at sea. Russian barrels stored at sea have risen by 17 MMBBL since further sanctions were put on Russia on January 10. Goldman sees the possibility for this amount to rise to 50 MMBBL? in the first half of 2025. Iranian barrels stored at sea are seen amounting to 14 MMBBL, as per Goldman's accounting. They see Iranian output falling by 400 MBPD this year, but tighter sanctions could see that amount rise to as much as 1 MMBPD. Trump drove Iran's oil exports to near-zero during part of his first term after re-imposing sanctions. Goldman says that such a production loss could push the Brent price into the high $80's by May.

Goldman thinks that OPEC+ will delay bringing back production from April to July. Goldman Sachs analysts said they do not expect U.S./China retaliatory tariffs to have a significant impact on energy prices "We believe near term implications to commodity markets will be limited given that neither global supply nor demand of these commodities are changed by China's tariffs," Goldman Sachs said in a note. Impacted U.S. volumes are likely to easily find alternative buying markets, while China replaces impacted import volumes with alternative suppliers, Goldman said.

Technicals

Technically the energies are having inside trading days today versus the price range seen yesterday.

WTI spot futures see support at 70.67-70.75. Resistance lies at the double top from Jan. 30- Jan. 31 at 73.84. The 100 day moving average on the DC chart lies at 71.44, the 50 day moving average lies at 72.15 today.

RB spot futures see support at 2.0613-2.0625 and then at 2.0429. Resistance lies at the overnight high at 2.1028-2.1051 and then at 2.1213-2.1234.

ULSD March futures see support at 2.3792 and then at 2.3418-2.3428. Resistance lies at 2.4525.

Natural Gas- NG is down 4.2 cents

NG futures have eased back again today as a tariff dispute with China is seen reducing U.S. flows there. A milder mid-February weather forecast seen yesterday has also weighed on prices. The pause in tariffs with Canada has also contributed to the pullback in prices the past 2 days as supply to the U.S. will thus not be disrupted.

The Henry Hub (HH) cash gas price has steadied the past 2 days at 3.200 to 3.350. On Tuesday, the HH gas price traded basically between $3.200 and $3.270. With the latter price coinciding with March NG futures valued almost at parity at 3.266/3.269.

China Gas Co. is to stop seeking new US LNG deals as profits are squeezed by the new US tariffs, according to Bloomberg citing a company source. Goldman has added that tariff measures could see a pause in long term China/U.S. LNG deals. For LNG, of the 105bcm that China imported last year, 5.6% came from the US. (ING)

ING writes that the investment fund long in TTF European gas futures seems fairly stretched and so the appetite for speculators to increase this significantly more (in the absence of a bullish catalyst) is likely limited. ING adds that gas is "deep in the coal switching range", thus making it less attractive. Investment funds again increased net long ICE TTF futures positions in the week to Jan. 31 back toward the high from late November. European gas markets are focused on the upside risks from above normal storage withdrawals this winter and summer refill requirements, as per commentary from Market News.

Technically NG futures still have the gap down to 3.118 from the weekend. Support lies below that on the DC chart at the 3.07 area. The 100 day moving average on the DC chart lies in between at 3.089. Resistance on the up side is seen at the overnight high at 3.233-3.240 and then at 3.324-3.330. Momentum is neutral, but looks to be attempting to turn upward.

Disclaimer

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