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First Look - Oil rises as Trump shortens Russia deadline; EU strikes trade deal with U.S.

July 28, 2025 | Narciso Cano

Oil climbs as Trump accelerates Russia truce deadline, EU and US strike trade deal
- The WTI prompt-month contract rose $1.28 to $66.44 Monday morning (7:45 AM CT)
- Oil gained after President Trump announced he would shorten the deadline for Russia to agree to a ceasefire in Ukraine
  - The original 50-day window, tied to threats of 100% “secondary tariffs,” has now been reduced to 10–12 days
- The US and EU reached a trade agreement on Sunday, setting a 15% tariff rate on most EU goods
  - Similar to the earlier Japan deal, the two sides halved the previously threatened 30% rate
  - Trump claimed the EU committed to purchasing $750B in American energy products
  - However, it's unclear how private firms will be compelled to meet that target
  - Rabobank’s Florence Schmit said, “The EU-US agreement on higher energy purchases, including LNG, will make no difference to the market balance unless the US administration sells the LNG itself or the EU pays above-market prices to outbid Asian buyers”
  - Trump and EU President Ursula von der Leyen appear to disagree on key elements of the deal
- OPEC+ will meet on Monday ahead of a meeting on Sunday to decide on production quota hikes for September
  - Oil traders expect OPEC+ to agree to another large production increase, completing the full 2.5 MMBbl/d unwind a year ahead of schedule

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Natural gas is trading slightly higher, after falling 40c last week
- While gas demand should be higher this week than the prior several weeks, demand should moderate over the next two weeks, based on current weather forecasts
- Golden Pass LNG has continued to nominate small volumes of feedgas, around 1 MMcf/d, as the facility starts up
Midwest gas-fired generation falls below 2024 levels (S&P)
- Despite hotter year-over-year temperatures in the Midwest, gas power generation in MISO has declined, driven by increased renewable generation and higher gas prices supporting more coal generation
- For July, electricity demand in MISO increased by 132 GWh year-over-year, with most of the increase being served by coal plants, which have increased output by 92 Gwh
Speculators increase net-short position in natural gas (BBG)
- According to CFTC data through last Tuesday, speculators increased their net-short position in Henry Hub futures by 10.5k contracts, bringing their total short position to 30k contracts
- Speculators were net-long for much of the year, but flipped to be net-short this summer as prices declined

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