The latest Market Talks covering Energy and Utilities. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.
The disconnect between oil market fundamentals and prices is reducing oil's appeal as an investment asset class, says David Russell, global head of market strategy at TradeStation. The closure of the Strait of Hormuz came when the market was oversupplied, "so in some ways you had one of the most bearish and one of the most bullish things happening at the same time," he says. Before oil was understood as one market, now traders have to consider the different moving parts, such as where tankers are going, which refineries are offline. "These are conversations we never had even a year ago." Unexpected and aggressive government interventions destroy the speculative desire to go long oil or even short oil, Russell adds. "And why get speculative bullish about oil when you can get speculative bullish about AI stuff?" (anthony.harrup@wsj.com)
1344 GMT - Oil futures are hovering around yesterday's levels as the market sees little movement toward settling the dispute over control of the Strait of Hormuz. News that more oil is making it through the strait, while still only a fraction of normal, is keeping oil in choppy trade, Dennis Kissler of BOK Financial says in a note. The estimates of higher crude flows and the EIA's report of a 17.4 million barrel weekly build in U.S. crude stocks "is keeping the long side of the trade nervous," he says. Tight global diesel supply remains the most bullish aspect of the market, he adds. "Even though more crude oil has moved, refined products not so much." WTI is up 0.1% at $81.31 a barrel and Brent is off 0.2% at $86.91. (anthony.harrup@wsj.com)
1217 GMT - E.ON's shares fall after the German regulator publishes the draft determination for gas distribution. The proposals are weaker than expected but the drop in share price offers a buying opportunity, J.P. Morgan analysts write. They retain their overweight rating on the stock. Under the proposals, the headline pretax return on equity of 5.76% is significantly below the markets expectation of above 7%. However, many of the proposals aren't applicable to the power sector and once adjustments are made, the number are more equitable, they write. E.ON's shares fall 4.1% at 17.15 euros.
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