The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.
1051 ET - Natural gas stored in underground facilities increased by 33 Bcf last week to 3,117 Bcf, the EIA reports, extending the inventory surplus over the five-year average to 195 Bcf from 185 Bcf the week before. The weekly injection was larger than the 23 Bcf average, and slightly bigger than the 31 Bcf estimate in a WSJ survey of analysts. "Seeing U.S. injections hold up despite extremely hot temperatures sets the stage for a huge jump in U.S. gas in storage in the coming shoulder season demand cycle," ADM Investor Services says in a note. The path of least resistance for natural gas points down, the firm adds. Nymex natural gas is off 2.4% at $2.623/mmBtu.(anthony.harrup@wsj.com)
1041 ET - Most major Gulf stock markets edge lower as geopolitical tensions continue to weigh on sentiment. The Dubai Financial Market General Index leads the decline, falling 1.5%. Saudi Arabia's Tadawul All Share Index and Qatar's QE index each lose 0.7%, and Abu Dhabi's benchmark index slips 0.1%. Dubai is more sensitive to shifts in sentiment because of its heavier weighting toward real estate and banks and its larger retail-investor presence, says Mazen Abou Ismail at FFA Private Bank Dubai. Recent falls in oil prices are offering limited support to regional equities as markets assess ongoing geopolitical risks, he says. (farhan.rafid@wsj.com)
1027 ET - The Gulf's non-oil recovery is taking hold, but its sustainability depends on the Strait of Hormuz reopening for an extended period, Capital Economics' Nicolas Crittenden says in a note. The GDP-weighted Gulf whole-economy purchasing managers' index rose to 52.5 in July from 51.8 in June, according to Capital Economics. This reflected a rebound in the UAE, an easing downturn in Qatar and signs of recovery in Kuwait, while Saudi Arabia remained the strongest of the Gulf's four biggest economies. Crittenden says the initial reopening of Hormuz helped drive the pickup in activity, but whether the recovery continues will depend on whether current negotiations over reopening the waterway prove successful. (farhan.rafid@wsj.com)
1024 ET - Saudi Arabia's resilience to the closure of the Strait of Hormuz masks a worsening underlying fiscal position, says William Jackson, chief emerging markets economist at Capital Economics, in a note. Access to the Red Sea helped keep oil exports flowing, while higher oil prices offset lower production and lifted second-quarter oil revenue 22% from a year earlier, according to Capital Economics. However, Jackson says the recent windfall only masks a budget deficit running at around 7% of GDP on a four-quarter basis, compared with 2.5% at the end of 2024. He expects oil prices to fall back, pushing public debt above 50% of GDP within the next few years and leaving the government with limited room to provide fiscal stimulus if another shock hits. (farhan.rafid@wsj.com)
0926 ET - Bitcoin falls slightly as it continues to trade within a tight range amid uncertainty over the Middle East conflict. Iran and Oman are finalizing a draft agreement to reopen the Strait of Hormuz, The Wall Street Journal reports. "However, there are doubts about whether the U.S. will give the deal the green light as it would hand Iran control of inbound traffic," XM's Raffi Boyadjian says in a note. Moreover, Iran needs to be satisfied the U.S. is meeting its side of the bargain while a full reopening of the Strait requires removing mines, he says. Investors are also exercising caution ahead of Friday's U.S. nonfarm payrolls report which is key for interest-rate expectations. Bitcoin drops 0.6% to $64,493, LSEG data show.(renae.dyer@wsj.com)
0925 ET - U.S. natural gas futures are lower as the market awaits weekly inventory data from the EIA, due at 10:30 a.m. ET. Analysts in a WSJ survey expected a 31 Bcf storage build, slightly smaller than the previous week's increase but above the five-year average for the week. The next five days "may mark the last major national cooling demand boost of the summer," Eli Rubin of EBW Analytics says in a note. While a bullish storage surprise could lend near-term support, fading heat, an expected increase in supply from the Permian basin and the storage surplus "underscore weak fundamentals in the end of summer." Nymex natural gas is off 1% at $2.662/mmBtu.(anthony.harrup@wsj.com)
0922 ET - Treasury yields rise after initial jobless claims come in at 199,000 versus the WSJ consensus of 204,000, suggesting a healthy labor market. Meanwhile, oil prices edge higher amid talks to reopen the Strait of Hormuz. A separate report from outplacement firm Challenger, Gray & Christmas finds that U.S.-based employers announced 33,429 job cuts in July, down 27% from cuts announced in June. The 10-year yield is at 4.65%, slightly higher than yesterday's close of 4.62%. The 2 year-yield is at 4.22%, also slightly higher than yesterday's close of 4.12%.(jessica.coacci@wsj.com)
0817 ET - Crude futures are higher as the market awaits the outcome of talks to reopen the Strait of Hormuz after Iran said it has agreed with Oman on a shipping route through the waterway. TP ICAP's Scott Shelton sees the likelihood of a fragile agreement "which I would argue is priced here for crude," as flows through the strait will recover "but not to the extent where the market gets swamped with oil." The market would also still need a risk premium for the possibility of a deal failing "relatively quickly," while not addressing the diesel shortage, he says in a note. WTI is up 0.8% at $75.83 a barrel and Brent climbs 1% at $80.28.(anthony.harrup@wsj.com)
0757 ET - Eurozone retail sales declined in June, though it was a decent quarter for goods sales, Pantheon Macroeconomics economist Melanie Debono says in a note. Sales volumes were down 0.3% on the month, partly reversing the 0.4% rise in May. Fuel sales rose 1.5% on lower oil prices, though that was not enough to offset declines in both food and non-food, non-fuel sales. "It seems, still-high fuel prices are eating into consumers' spending outside of fuel," Debono says. Despite June's fall, sales were up 0.2% in the second quarter, only a touch below the 0.3% increase in the first quarter. Since then, consumer confidence has risen, though fuel prices also increased further, pointing to subdued retail-sales readings through the summer, she says. (edward.frankl@wsj.com)
0746 ET - A deal to reopen the Strait of Hormuz would be positive for the euro but not enough to materially alter the single currency's trajectory, Ebury's Matthew Ryan says in a note. This is partly because market positioning already reflects a fairly high degree of optimism around Iran war de-escalation, he says. The future of Iran's nuclear ambitions also remains far from resolved, which could contain risk appetite, he says. The European Central Bank could raise interest rates in September even if a peace deal is agreed as elevated energy prices aren't weighing the economy as heavily as anticipated yet remain an inflationary risk, he says. However, this is largely priced in. The euro falls 0.1% to $1.1540.(renae.dyer@wsj.com)
0722 ET - The dollar is undervalued against eight of the nine other G-10 currencies, suggesting some additional risk premium is priced in, MUFG Bank's Derek Halpenny says in a note. The dollar has potentially priced in the prospect of a new ceasefire deal in the Middle East conflict more quickly than other markets, he says. Another factor weighing on the dollar's performance is the joint U.S.-Japan intervention to strengthen the yen last week. Moreover, the WSJ reports that President Trump has spoken to Federal Reserve Chair Kevin Warsh repeatedly. This reinforces the impression of greater political influence undermining Fed independence, he says. The DXY dollar index rises 0.1% to 99.784 but remains near a seven-week low of 99.413 reached Monday. (renae.dyer@wsj.com)
0625 ET - The cost of insuring euro-denominated credit against default remains steady as focus is on potential U.S.-Iran talks. There is "growing optimism that the United States and Iran could reach a peace deal allowing the Strait of Hormuz to reopen," ActivTrades' Ricardo Evangelista says in a note. The iTraxx Europe Main index of euro investment-grade credit default swaps is unchanged at 51 basis points, S&P Global Market Intelligence data show.
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