The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.
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. (miriam.mukuru@wsj.com)
0541 ET - U.S. Treasury yields are slightly higher across the curve, although more so for short-dated yields as investors bet on Federal Reserve rate hikes to tame inflation. Middle East developments are also watched as a proposed agreement between Oman and Iran could lead to a deal between the U.S. and Iran to reopen the Strait of Hormuz. Uncertainty remains, however, as the potential deal between Oman and Iran could leave the latter controlling traffic in the Strait of Hormuz, Kudo.com's Konstantinos Chrysikos says in a note. The two-year Treasury yield rises 1.9 basis points to 4.197%, while the 10-year yield increases 0.6 basis points to 4.622%, according to Tradeweb. The DXY dollar index rises 0.1% to 99.755. (emese.bartha@wsj.com)
0514 ET - The increase in German manufacturing orders is encouraging, though it's still too early to declare a turnaround in the economic trend, the DIHK German Chamber of Commerce and Industry's Jupp Zenzen says. Factory orders grew 3.1% on month in June, their highest levels since the start of the year, driven by larger orders in machinery and electrical engineering. However, without these volatile large orders, the order intake stagnated in the second quarter, Zenzen says. "The fundamental structural problems in Germany have not yet improved." The international environment continues to be uncertain, and reforms to the industry are necessary for a long-term growth path, he says. (edward.frankl@wsj.com)
0508 ET - The euro could struggle to rise meaningfully unless U.S. nonfarm payrolls data on Friday are weaker than anticipated, ING's Francesco Pesole says a in a note. The recent decline in oil prices isn't feeding through to lower U.S. front-end rates, leaving economic data as the key driver needed to lift the euro versus the dollar, he says. With no major eurozone specific catalysts on Thursday, ING is neutral on the euro. "The [euro] can stabilize in the $1.1530-$1.1550 area ahead of tomorrow's U.S. payrolls report." The euro falls 0.1% to $1.1543. (renae.dyer@wsj.com)
0457 ET - Harbour Energy's second-half free cash flow will be hit by Norway and U.K. tax payments, J.P. Morgan analysts Alejandra Magana and Riddhi Agarwal write. The company has guided for free cash flow of around $1.8 billion over the year but delivered this in the first-half. This means cash flow over the remainder of the year will be broadly neutral, they write. Shares rise 7% to 248.4 pence.(adam.whittaker@wsj.com)
0425 ET - Harbour Energy investors will want to know if there is further upside to returns, Jefferies analysts write. The company upgrades its free cash flow guidance to around $1.8 billion but already delivered this over the first half of the year. The company plans to return a minimum of $800 million to shareholders over 2026. This comes after it was able to capture the higher oil and gas prices with a strong operational performance, they write. Shares rise 7% to 248.4 pence.
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