The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.
0220 GMT - Oil jumps in the morning Asian session on reports of attacks in the Middle East. A U.S. official told ABC News that Israeli missiles have hit a site in Iran. Explosions also were reported in southern Syria and near Baghdad, Iraq, The Jerusalem Post reported. "If these reports turn out to be true, fears over further escalation will only grow," ING commodities strategists say in a note. Concerns may also grow that markets are possibly shifting closer toward a situation where oil-supply risks lead to actual supply disruptions, the strategists add. Front-month WTI crude-oil futures jump 3.6% to $85.68/bbl; front-month Brent crude futures climb 3.6% to $90.23/bbl. (ronnie.harui@wsj.com)
0200 GMT - Karoon Energy's production downgrade unsettles Citi, although it thinks issues at the Who Dat field in the U.S. Gulf of Mexico appear mostly temporary. "If the Who Dat issues become more permanent, it would suggest Karoon has overpaid for the asset," analyst James Byrne says in a note. "Perhaps more worryingly, it could significantly undermine the equity market's confidence on the company's ability to create value from future acquisitions, and lender confidence to expand the borrowing base." Still, Citi says most of the downgrade at Who Dat appears to be a temporary curtailment of gas production due to low Henry Hub prices, and bottlenecks in the subsea infrastructure, as opposed to reservoir issues. (david.winning@wsj.com; @dwinningWSJ)
0118 GMT - Santos's move to equity marketing its uncontracted share of liquefied natural gas cargoes from the PNG LNG export facility in Papua New Guinea has Jarden speculating about how its strategy could shape up. In a note, analyst Nik Burns says Santos likely has seven uncontracted equity cargoes remaining this year, and 11 in 2025. "The question for Santos is whether it continues to sell these cargoes into the spot market or looks to execute medium-term contracts to move away from spot LNG prices, which have declined below contract LNG prices in the past three months," Jarden says. (david.winning@wsj.com; @dwinningWSJ)
0100 GMT - Woodside Energy's subtle change of language around future LNG supply deals catches Citi's attention. Woodside says it's looking to "layer in" additional long-term offtake LNG agreements, and analyst James Byrne thinks this could mean the company is less sanguine on long-term spot LNG pricing. "We think this is rational and should be received well by the equity market where investors would prefer contracted volumes over greater earnings volatility in spot LNG," Citi says. (david.winning@wsj.com; @dwinningWSJ)
0056 GMT - Whitehaven Coal's sales guidance for its recently acquired Blackwater and Daunia metallurgical coal mines cheers Ord Minnett. Whitehaven says it expects coal sales from the operations, bought from BHP and Mitsubishi, to total 3.5 million-4.0 million tons in FY 2024. In a note, analyst Tim Elder says that is 12% higher than he had forecast. "And, while this appears slightly softer than consensus (-4% at the midpoint), it significantly de-risks production expectations for the assets," says Ord Minnett, which rates Whitehaven a buy. (david.winning@wsj.com; @dwinningWSJ)
0029 GMT - Oil falls in early Asian trade, hovering at a three-week low. Markets have been on edge since Iran's attack on Israel, and investors have been watching for a possible Israeli response, which could put oil supplies at risk, the ANZ Research team writes in a note. However, Citi research analysts reckon lingering medium-term geopolitical risks have already priced in. A strong U.S. dollar is also capping gains, as oil future contracts are traded in the greenback, ANZ adds. Front-month WTI crude oil futures are down 0.25% at $82.52/bbl; front-month Brent crude oil futures are 0.2% lower at $86.90/bbl. (kimberley.kao@wsj.com)
2000 GMT - Israel Bonds said its global sales have risen about $3 billion since Hamas launched an attack against Israel on Oct. 7 of last year. The sum is almost three times the annual sales volume recorded in recent years, Israel Bonds said. Since Oct. 7., U.S. state and municipal governments have invested in Israel Bonds for a total of $1.7 billion, the company said. It added Palm Beach County has become the world's largest investor in Israel Bonds, with over $700 million invested. (stephen.nakrosis@wsj.com)
1952 GMT - Mexican banks will continue to be challenged by a sluggish economy and inflationary pressures, Fitch Ratings says, adding low asset growth and margin pressures are expected through 2025. Although rate cuts are expected to continue, lower local interest rates might not be enough to fuel higher credit demands or bank loans, Fitch says. A slower economy and presidential elections in both Mexico and the U.S. may pressure consumer spending, according to Fitch. "Expected lower loan growth, moderate deterioration of asset quality and the sector's sizeable exposure to the federal government and related state-owned companies are key drivers of the neutral sector outlook for banks." (stephen.nakrosis@wsj.com)
1926 GMT - U.S. natural gas futures settle higher after a storage report showing a slight reduction last week in the inventory surplus, while colder near-term weather trends are likely to lift demand for the coming week. The EIA reported a 50 Bcf build in underground gas storage for last week--roughly in line with the 45 Bcf build estimated in a Wall Street Journal survey--which lowered the storage surplus above the five-year average to 622 Bcf from 633 Bcf the previous week. Natural gas for May delivery settles up 2.6% at $1.757/mmBtu. (anthony.harrup@wsj.com)
1912 GMT - Crude oil futures fluctuate in an indecisive session following three days of declines, as traders appear to keep the geopolitical risk premium on hold. Despite the oil price drop since Iran's attack on Israel last weekend, the threat of a flare-up in the Middle East remains, says Arlan Suderman, chief commodities economist at StoneX, adding that Israel has promised to respond. "We do not know what that response will be, or when it will occur, so we cannot know if the risk of a broader regional conflict that would negatively impact crude oil production and/or shipment has passed or if it will escalate," he says in a note. WTI settles up 4 cents at $82.73 a barrel, and Brent slips 0.2% or 18 cents to $87.11 a barrel. (anthony.harrup@wsj.com)
1844 GMT - With United Airlines shares soaring in the wake of 1Q results, the market seems to believe the sturdiness of air travel demand and pricing, along with lapping cost inflation and resilient capacity constraints, make United and Delta Airlines "relative safe havens in a world of uncertain consumer trends," Morgan Stanley analyst Ravi Shanker says in a research note. Shanker believes United has comfortable room to top its already strong 2Q guidance and is facing easier comps in the second half of the year, along with some structural tailwinds from loyalty momentum and fewer capacity constraints. Shares climb another 5% after surging 17% Wednesday. (dean.seal@wsj.com)
1830 GMT - The Panama Canal Authority says it's pulling back on restrictions put in place in response to drought conditions seen last year--which will increase the amount of vessels through the canal. Starting May 16, the PCA will raise total daily transits by 4 to 31. In media reports, the PCA has been quoted as saying that pending adverse weather, the canal would reopen in full by 2025. The Panama Canal is a key passageway for commodities that travel over the ocean--including oil, natural gas, and grains. Freight issues with vessels traveling over the ocean are a factor that can lift commodity prices. (kirk.maltais@wsj.com; @kirkmaltais)
(END) Dow Jones Newswires
April 18, 2024 22:21 ET (02:21 GMT)
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