Daily Energy Market Update 3-10-2025

Crude is up 15 cents????? RB is up 1.18 cents???? ULSD is down 0.21 cents

Overview

Crude oil prices are higher now after starting the overnight session lower. Energy prices are seen "consolidating" after WTI settled lower last week for the 7th straight week, the longest losing streak since November 2023. The move higher is seen due to worries over sanctions against Russia and Iran. Overnight prices had fallen on disappointing Chinese CPI data.

Also seen as supportive is news that the U.S. Energy Secretary may seek $20 billion to refill the SPR. (Bloomberg) U.S. Energy Secretary Chris Wright estimates it would take $20 billion and years to accomplish President Donald Trump's goal of refilling the Strategic Petroleum Reserve to its maximum capacity, the Energy Department said on Friday. (Reuters)

President Trump is seeking to choke off Iranian oil exports as part of efforts to pressure the country to rein in its nuclear programme. Iran's Supreme Leader Ayatollah Ali Khamenei said on Saturday that his country will not be bullied into negotiations. (Reuters)

In data issued over the weekend, China’s consumer inflation dropped far more than expected to fall below zero for the first time in 13 months. The consumer price index declined 0.7% from a year earlier, the National Bureau of Statistics said Sunday, compared with a 0.5% gain in the previous month. That was lower than all but one forecast in a Bloomberg survey of analysts, whose median estimate was for a 0.4% drop. “Domestic demand remains weak.” as per 1 Chinese economist. The statistics bureau said a key factor for the decline in inflation was the effect of a high base from a year earlier, created by elevated prices caused by spending during the Lunar New Year. When accounting for seasonality, the statistics bureau estimates consumer inflation actually rose 0.1% from a year earlier in February, according to a statement published on Sunday.

On Friday, Bloomberg reported that Russia is open to a pause to fighting in Ukraine, raising the prospect of a resumption in Moscow’s crude exports. President Trump earlier pressured the two warring nations to hasten peace talks. The U.S. government is studying ways it could ease sanctions on Russia's energy sector as part of a broad plan to enable Washington to deliver swift relief if Moscow agrees to end the Ukraine war, according to two sources familiar with the matter, as per Reuters reporting. Yet, Trump said the U.S. would increase sanctions on Russia if it fails to reach a ceasefire deal with Ukraine. (Reuters)

Yemen's Houthis have warned they will resume attacks on vessels travelling through the Red Sea if a ceasefire in Gaza falls through. (Quantum Commodities)

The CFTC data seen Friday showed money managers added 35,645 contracts to their net length in WTI on ICE/CME combined in the week ended Tuesday March 4. This was due to a very large amount of short positions having been covered on the CME. But, speculators reduced their net longs in ICE Brent by 61,121 lots over the last reporting week to 159,425 lots as of last Tuesday -- the smallest position since December, as per ING reporting. RB net length fell by 7,502 contracts as new shorts were added. ULSD length fell by 4,124 contracts as long positions were sold.

Notable in the settlements Friday was the fall in the April / June HO spread. It seems that tariff concerns and the slightly weaker than expected jobs report conspired to cause the April June HO spread to shrink by 1.87 cents Friday. That is in addition to the drop in that spread of 0.97 cents seen Thursday. The spread has fallen further today to its lowest value in over 1 month. The spread is down a further 0.5 cents today.

Kazakhstan again missed its OPEC+ crude production target in February, due to rising output at its Tengiz project, a senior energy ministry official said March 5. Kazakhstan produced 1.747 MMBPD in February -- well above its quota of 1.468 MMBPD. “However, we'll put all our efforts into compensating throughout the year,” the official said. A serial overproducer, Kazakhstan has agreed to submit a revised compensation plan to the OPEC Secretariat by March 17. (Platts)

This week will see the release of the monthly reports from the EIA, OPEC and the IEA. The EIA's STEO will be released tomorrow Tuesday, followed by OPEC's monthly report on Wednesday and the IEA's report on Thursday.

Technicals

The momentum on the WTI spot futures chart is trying to turn positive from an oversold condition. Technically HO is oversold on the DC chart basis. RB momentum has turned negative in the fall of almost 11.5 cents in the April contract over the past week.

Although the April RB fell by nearly 11.5 cents last week, it looks to have carved out support with the past 4 sessions' lows seen between 2.0892 and 2.0961. Resistance above lies at 2.1505-2.1521 and then at 2.2744-2.1755.

ULSD spot futures have support at the recent low at 2.1934 and then at 2.1649-2.1667. Resistance comes in at 2.2487-2.2494 and then at 2.2755-2.2766.

WTI spot futures see support at 66.12 and then at the double bottom at 65.22/65.27. Resistance above is seen at 68.52-68.59 and then at 69.69-69.73. ?

Natural Gas--NG is up 18.7 cents

NG spot futures have gapped higher, making a fresh high since December 28, 2022. The up move today comes even as the weekend weather forecast moderated and demand will ease in the coming weeks. The over riding theme for higher prices seems to be the concern over refilling storage. The worry over a possible gas supply loss due to Canadian tariffs is also supportive. Also, today we are hearing some chatter regarding LNG export capacity increasing in the coming months as being supportive for prices.

Over the weekend, the near-term temperature outlook has trended milder & the forecast is now calling for 233 GWDDs for March 10-23, the single fewest for the period in the last 5 yrs, as per Celsius Energy data. Demand starting yesterday has begun a sustained decline as warmer temperatures expand across the US resulting in daily storage injections that may top +5 BCF/d by next weekend.

The next day Henry Hub cash price has risen considerably today. The last traded print seen is $4.65 versus April NG futures printing near $4.64.

Average gas output in the Lower 48 U.S. states has risen to 105.8 BCF/d so far in March, up from a record 105.1 BCF/d in February, according to LSEG data.

On Friday, LSEG forecast average gas demand in the Lower 48, including exports, will fall from 110.4 BCF/d "this" week to 109.5 BCF/d "next" week. These forecasts are down significantly from those seen earlier in the week. On Tuesday, demand was forecast to be 118.8 BCF/d "this" week dropping to 115.2 BCF/d "next" week. Thus, Friday's demand forecast was 14.1 BCF/d lower than that seen Tuesday.?

One colleague has pointed to the Plaquemines LNG plant facility's plan to increase volume to 3.7 BCF/d? by the 4th quarter. Currently, the Plaquemines facility has a capacity of 2.6 BCF/d. (Valoranalytics.com) Additionally, LNG demand will rise soon.? Venture Global LNG will begin commercial operations at its Calcasieu Pass plant in Louisiana on April 15. (Reuters) The facility is set to export 10 Metric Tons per annum, equating to 1.3 BCF/d. (Offshore Energy)

CFTC data seen Friday showed money managers added 1,598 contracts to their net length, thus bringing their total net length to 108,075 contracts.

The gap on the spot NG futures from Friday to today lies from 4.426 to 4.461. The low of the day was made right on the opening of the session Sunday evening.? NG futures were locked limit up for 2 minutes early on in Sunday night's session. They rose to lock limit at 4.899 at 6:11 PM Sunday night and stayed there until they eased back at 6:13 PM to then trade 4.808.? The volume over 4.808 is light in today's session.

The high made near the opening Sunday evening is 4.901. NG spot futures settled up 14.74% / 56.5 cents on the week on Friday and is up a further 4.25 % / 18.7 cents today from Friday's settlement.

The up move today has tested the upper bollinger band on the DC chart, which lies at 4.74. The DC? chart momentum is not yet overbought. Resistance above is likely at 4.670-4.672 via the April 60 minute chart. Above that the overnight high at 4.901 provides resistance. Support is seen at 4.471-4.476 and then at 4.362-4.367.

Disclaimer

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