The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.
1040 GMT - Middle Eastern investors are turning toward domestic priorities amid the conflict in the region, reducing financing sources for governments outside the region, BlackRock Investment Institute says in a note. "Greater sovereign borrowing and persistent fiscal deficits, alongside a shift in Middle Eastern investment toward domestic priorities, have reduced capital available for overseas investment and further intensified competition for capital," it says. Scarcity-driven inflation, amplified by the Middle East energy and commodity shock, has driven a sharp repricing of markets' Federal Reserve rate expectations from easing to tightening, prompting a global rise in bond yields, BlackRock says. Market uncertainty about the Fed's reaction function under the new Chairman Kevin Warsh has also pushed the term premium higher, the asset manager says. (emese.bartha@wsj.com)
1014 GMT - BP's new CEO Meg O'Neill wastes no time putting her stamp on the business, AJ Bell's investment director Russ Mould writes. She has put BP's U.S. biogas business Archaea up for sale just days after doing the same for its U.K. North Sea assets. O'Neill will be aware she can't rely on oil and gas prices remaining high forever and will need to ensure the company can prosper when the backdrop isn't as supportive, he adds. BP shares rise 1% to 557.70 pence. (adam.whittaker@wsj.com)
1009 GMT - Palm oil closed higher, supported by overnight gains in rival soy oil and improving demand prospects ahead of India's festive season, Kenanga Futures analysts say in a note. However, softer crude prices amid renewed U.S.-Iran talks that may lead to a partial reopening of the Strait of Hormuz for energy shipments may weigh on biodiesel demand expectations and limit further price gains. Kenanga Futures sees support and resistance for the October futures contract at 4,600 ringgit a metric ton and 4,700 ringgit a ton, respectively. The Bursa Malaysia Derivatives contract for October delivery rose 65 ringgit to 4,694 ringgit a ton. (jason.chau@wsj.com)
0935 GMT - U.S. Treasury yields and the dollar rise in European trade as oil prices increase. Iran on Monday said there were no planned talks with the U.S., creating uncertainty after the U.S. recently cancelled planned attacks against Iran in order to allow discussions to proceed. Discrepancy between U.S. and Iranian messaging could sustain safe-haven demand and keep oil prices supported, feeding inflation concerns, says BankPro's Paolo Broccardo in a note. Geopolitical uncertainty is providing the dollar with underlying support, he says. The 10-year Treasury yield rises 2.2 basis points to 4.705%, according to Tradeweb. The DXY dollar index increases 0.1% to 100.013. (emese.bartha@wsj.com)
0919 GMT - The cost of insuring euro-denominated credit against default stays steady due to uncertainty around the Middle East conflict. The U.S. cancelled planned attacks against Iran and said the two nations would hold talks to end the conflict. However, Iran on Monday said the were no planned talks with the U.S., creating uncertainty around the possible end to the conflict. The iTraxx Europe Main index of euro investment-grade credit default swaps is unchanged at 52 basis points, S&P Global Market Intelligence data show. (miriam.mukuru@wsj.com)
0916 GMT - AI investment is among a number of factors that are accelerating a rise in long-term bond yields, BlackRock Investment Institute says in a note. AI adds to the impact of prolonged supply shocks and heavy government borrowing, it says. "The structural forces behind higher bond yields have been building for several years but intensified this year." In this environment, government bonds provide less ballast--implying that they act as less of a stabilizing asset--but provide more income, "expanding the opportunity for durable income," the asset manager says. (emese.bartha@wsj.com)
0902 GMT - BP's results show new CEO Meg O'Neill's approach is starting to work, research director at XTB Kathleen Brooks writes. O'Neill got a boost from supportive market conditions that pushed oil and gas prices higher, but she has refocused the business around hydrocarbons, Brooks says. She has also had to navigate internal volatility after the ousting of the company's chairman in May, she adds. BP shares rise 1% to 557.70 pence.(adam.whittaker@wsj.com)
0849 GMT - BP seems to be taking a more selective approach to selling assets after lowering its disposal guidance to between $8 billion and $9 billion for this year, RBC Capital Markets analyst Biraj Borkhataria writes. The British energy major had previously guided for up to $10 billion. This is a sensible approach given the stronger macroeconomic environment, he writes. Overall, BP's new five priorities to turn the company around fall under the general bucket of "do better", he adds. "BP will need to 'walk the talk' consistently over the coming quarters to re-build investor confidence," he says. BP shares rise 1% to 557.70 pence. (adam.whittaker@wsj.com)
0818 GMT - The steepening of the U.S. 2-30-year Treasury yield curve after last week's Federal Reserve meeting reflects growing inflation worries and uncertainty over how the Fed will respond, BlackRock Investment Institute says in a note. This isn't anything new but a continuation of thebroader macro regime over several years, it says. "The fastest AI investment buildout in history is unfolding in a world shaped by supply scarcity, where energy constraints, tight labor markets and geopolitical fragmentation are shifting the focus from efficiency to resilience." Meanwhile, governments and hyperscalers are drawing on the same pool of savings, intensifying competition for capital and these forces are pushing investors to demand higher returns to lend for longer, it says. (emese.bartha@wsj.com)
0802 GMT - Current oil prices include only a modest geopolitical risk premium despite persistent uncertainty in the Middle East, analysts at Goldman Sachs say. The U.S. bank estimates that Brent crude, the global oil benchmark, is fairly valued at around $80 a barrel based on oil inventories, expected demand from OECD countries, its estimate of the long-term value of oil and historical trading patterns linking inventories to prices. Goldman expects Brent to remain in its $80-$90 range until either a new U.S.-Iran deal is reached or the conflict escalates significantly. Still, the physical market is getting tighter amid lower flows from the Persian Gulf and the Red Sea, lower Russian oil exports, and stronger Asian imports. "Our estimated Persian Gulf flows edged down to 36% of prewar levels versus nearly 80% of prewar levels in the first half of July," they say. (giulia.petroni@wsj.com)
0755 GMT - China's activity indicators likely softened in July, partly due to extreme weather events and a seasonal slowdown, according to Citi analysts in a research note. Citi expects industrial growth to decelerate to 4.8% on year in July from 5.3% in June, with production subindex in the PMI survey slipping into contractionary territory. The reading could still be higher than the low rates seen in April and May, thanks to the buoyant high-tech sectors and a "more benign base", the analysts say. "An investment rebound may not take place in July with weather events and yet-to-accelerate policy deployment," they say. (tracy.qu@wsj.com)
0747 GMT - British energy major BP has received unsolicited approaches expressing interest in its North Sea oil assets, the company's CEO Meg O'Neill tells CNBC. O'Neill has told new U.K. Prime Minister Andy Burnham that the country should prioritize using oil and natural gas reserves from the North Sea, she said. "We generate jobs, we generate tax revenue, we generate all those additional positive impacts." BP shares rise 1.2% to 558.7 pence.
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