The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.
1513 ET - U.S. natural gas futures rise with September making its debut as the new front month. Prices received a modest lift from the EIA's storage report showing a below-estimate 28 Bcf inventory build for last week that left the surplus against the five-year average little changed at 185 Bcf. "Cooling demand is expected to trend higher across most of the U.S. in the coming weeks, likely resulting in lighter storage builds as the market moves through the historical peak of summer," Andy Huenefeld of Pinebrook Energy Advisors says in a note. Nymex natural gas for September delivery settles up1.3% at $2.758/mmBtu.(anthony.harrup@wsj.com)
1508 ET - Oil futures return some of the previous session's gains after the U.S. hit back at Iran, as expected, for an attack on its bases in Jordan. Continuing strife around the Persian Gulf region limits losses. "The conflict has somehow morphed from eliminating Iran's nuclear program to opening the Strait of Hormuz," although there doesn't seem to be a plan to reopen the waterway, Mizuho's Robert Yawger says in a note. "Saudi exports through the Red Sea are now risky, and the concept of Iran abandoning their nuclear program and handing over their nuclear dust to the U.S. seems to be highly unlikely." WTI settles down 1% at $83.59 a barrel and Brent falls 1.9% to $89.03 a barrel ahead of Friday's expiration.(anthony.harrup@wsj.com)
1125 ET - U.S. natural gas futures turn higher as inventories increased by less than expected last week, leaving the storage surplus over the five-year average little changed. Natural gas in underground storage increased by 28 billion cubic feet to 3,084 Bcf, the EIA reports, putting stocks 185 Bcf above the 2021-2025 average and 32 Bcf below their year-earlier level. The storage injection was slightly larger than the 26 Bcf average, but less than the 38 Bcf estimate in a WSJ survey of analysts. Nymex natural gas is up 1% at $2.750/mmBtu.(anthony.harrup@wsj.com)
1115 ET - Stock markets in the Gulf Cooperation Council countries end mixed. Investors remain cautious about the Iran war, especially in the oil-and-gas producing states. Egyptian authorities said Thursday that an explosion at a port on Egypt's Mediterranean coast was caused by a drone attack in a new threat to a vital energy corridor. Qatar stocks fall 0.9% and the Dubai Financial Market General Index slips 0.1%. Saudi Arabia's Tadawul All Share Index and Abu Dhabi's benchmark index each gain 0.4%. Despite Thursday's advance, the Saudi benchmark index ends July down about 2% from June, marking its fourth consecutive monthly decline. (farhan.rafid@wsj.com)
1111 ET - Saudi Arabia is increasingly routing crude exports through Egypt, using the Sumed pipeline to move oil to buyers in Europe, the Baltic, and even the U.S. Gulf Coast, according to Kpler data. Traffic through the Bab el-Mandeb Strait has declined significantly, with about 43% of Yanbu crude still moving south through the strait, compared with 81% before Houthi threats. Instead, exports from Egypt's main Mediterranean oil export terminal, Sidi Kerir, reached their highest level this year in July. Most crude leaving Sidi Kerir is heading to Europe--including Poland, Lithuania, and Italy--and the U.S., with virtually none moving east, says Emmanuel Belostrino, Kpler's head of global crude and geopolitical market data. Egypt's share of Yanbu exports had already been rising earlier in July, suggesting Saudi Arabia began preparing alternative export routes before the Houthis announced a Red Sea blockade on their shipments. (giulia.petroni@wsj.com)
0951 ET - U.S. natural gas futures are lower with the market awaiting the EIA's weekly inventory report due at 10:30 a.m. ET. The data is expected to show a larger-than-usual build extending the storage surplus over the five-year average. Although weather forecasts have turned a bit warmer, the surplus will keep pressure on prices, Dennis Kissler of BOK Financial says in a note. Some near-term positives remain, "with LNG demand at just over 18 Bcf a day and bargain hunting buyers believing upside value probabilities outweigh the downside at these price levels," he adds. Nymex natural gas is off 1% at $2.695/mmBtu. (anthony.harrup@wsj.com)
0917 ET - Crude oil futures are giving back some of the previous day's gains after the U.S. launched strikes against Iranian targets overnight. The pullback seems related to profit-taking after yesterday's big oil price rise, Ritterbusch & Associates says in a note. "Sustainability of this price downdraft is questionable given the continued strength in the WTI and Brent spread curves." The Brent front month could soften ahead of Friday's expiration more on positioning than any loosening in European crude supplies, the firm adds. WTI is down 0.4% at $84.13 a barrel and Brent is down 0.6% at $90.17.(anthony.harrup@wsj.com)
0840 ET - The Bank of England is likely to keep interest rates unchanged for a prolonged period provided energy markets remain contained, Charles Stanley Direct's Rob Morgan says in a note. "Rate cuts are impossible to justify so long as inflation risks loom large on the horizon, while quelling it with a rate rise would increase borrowing costs and make things even harder for large parts of the economy." Policymakers see encouraging signs inflationary pressures will moderate once the energy price shock passes. However, until policymakers are more confident that higher energy costs won't ignite wider price escalation or feed into wage demands, higher rates cannot be ruled out, he says. The BOE voted 6-3 to keep rates at 3.75% Thursday, with three policymakers favoring a rate hike. (renae.dyer@wsj.com)
0837 ET - The Bank of England voted to keep interest rates on hold at 3.75%, with six members voting in favor while three members voted to raise rates by 25 basis points. "Three members in favor of a hike indicates that policymakers remain cautious about the inflation outlook," Hargreaves Lansdown's Alice Haine says in a note. Escalating tensions in the Middle East have pushed up energy costs and raised the risk of high global inflation. The BOE said that there is little evidence so far to show second-round effects of inflation. However, the BOE noted that the risks to the inflation outlook are tilted to the upside relative to the central projection in the July Monetary Policy Report. (miriam.mukuru@wsj.com)
0834 ET - There remains a meaningful probability of a Bank of England interest-rate hike at either the September or November meeting, as policymakers continue to be concerned about volatility in the Middle East and the upside risks to energy prices, Raj Badiani, economics director at S&P Global Market Intelligence said. Yet the on-off ceasefire between the U.S. and Iran has helped dissipate some of the global energy-price shock arising from the conflict, despite uncertainty over any longer-term agreement, he says. "As a result, we expect a lower peak in U.K. headline inflation over the coming months, reducing pressure on the BOE to consider interest-rate increases in the near term," he says. (edward.frankl@wsj.com)
0830 ET - Although the Bank of England continued to signal the possibility of raising interest rates Thursday, this looks unlikely, Capital Economics economist Paul Dales says. The BOE expects inflation to reach a peak of 3.2% in the fourth quarter before falling below 2.0% at the start of 2028. Capital Economics expects inflation to peak at 3.5% but sees it falling quicker to 2.0% by the end of 2027. "That's why we don't think interest rates need to rise," Dales says. "In fact, if we're right, interest rates may be cut to 3.00% in 2027." The BOE voted 6-3 to leave rates at 3.75%. (renae.dyer@wsj.com)
0758 ET - Markets are expected to continue pricing in the possibility of the Bank of England interest rate rises later this year due to persistent inflation risk, Franklin Templeton Institute's Michael Browne says in a note. The BOE voted to keep rates on hold at 3.75% at Thursday's rate decision. High oil prices from the Middle East conflict add inflationary pressures as well as the impact of drought on food prices, Browne says. This factors are likely to cause investors to continue expecting rate rises from the BOE in 2026. Investors currently price in a total of 32 basis points of BOE rate rises in 2026, LSEG data show.
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