The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.
2115 ET - Asian government bonds fall in price terms amid rising oil prices, which typically spur inflation and could prompt central banks to raise rates further. Global yields are moving higher, supported by firmer oil prices as optimism over a reopening of the Strait of Hormuz fade, OCBC Group Research says in a note. OCBC cites media reports suggesting a proposed Iran-Oman shipping arrangement falls short of a full reopening of the strait. Yields on Japan's 10-year government bonds rise 2 bps to 2.780%, that on Australia's 10-year sovereign securities climb 5 bps to 4.9690%, and those on New Zealand's 10-year government debt gain 3 bps to 4.7080%. (ronnie.harui@wsj.com)
1943 ET - Oil rises in early Asian trade amid concerns over supply disruptions in the Middle East. The "Iranian-backed Houthi militant group said they had conducted a 'large-scale' attack on forces from Yemen's Saudi Arabia-backed government, killing and injuring 'hundreds' of troops," say ANZ Research analysts, noting media reports. "This is on the back of ongoing threats to shipping in the Red Sea, a key route for Saudi oil since the Middle East conflict began," the analysts say in a research report. Front-month WTI crude oil futures are 1.0% higher at $78.05 per barrel. (ronnie.harui@wsj.com)
1521 ET - Oil futures recover ground as the market is left waiting for a deal between the U.S. and Iran to reopen the Strait of Hormuz after Iran and Oman agreed on a shipping route for the waterway. "The current diplomatic exchanges have merely raised hopes that tensions could ease. They do not mean that an agreement has already been signed or can be effectively implemented," XS.com market analyst Linh Tran says in a note. "Risks related to military activity, maritime transportation and oil supply from the Middle East remain firmly in place." WTI settles up 2.8% at $77.29 a barrel and Brent rises 3.8% to $82.49 a barrel. (anthony.harrup@wsj.com)
1509 ET - U.S. natural gas futures settle lower after a weekly inventory build comes in slightly above expectations while increasing the storage surplus over the five-year average. Gas stored in underground facilities rose by 33 Bcf to 3,117 Bcf, putting inventories 195 Bcf above the 2021-2025 average for the time of year, the EIA said. "Selling pressure intensified following the release of the storage report, and prices quickly moved to new intraday lows," says Andy Huenefeld of Pinebrook Energy Advisors. "Market participants appear to be looking past the upcoming heat wave and are instead focused on the strong storage position and the impending start of the shoulder season." Nymex natural gas settles down 1.8% at $2.640/mmBtu. (anthony.harrup@wsj.com)
1305 ET - Oil futures are rising as the market waits for news on a possible deal between the U.S. and Iran to reopen the Strait of Hormuz, while Houthis continue attacks and threats against shipping in the Red Sea. Traffic through the straits of Hormuz and Bab al-Mandeb remains subdued, although some ship movement has occurred, notes Dennis Kissler of BOK Financial. But "crude traders remain focused on the U.S.-Iran agreements, and the longer the delays, the more prices will fade back to the upside." WTI is up3.7% at $78.01 a barrel and Brent gains 4.4% to $82.92.(anthony.harrup@wsj.com)
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%.
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