The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.
1656 ET - Expand Energy's recently announced $1.25 billion acquisition of natural-gas supplier Twin Eagle from private-equity firm Five Point Infrastructure will increase the publicly traded energy company's access to critical assets without substantial capital outlays, says Gabriele Sorbara, a senior equity analyst at financial-services firm Siebert Williams Shank. Sorbara points to Twin Eagle's contractual rights to use third-party pipelines and storage tanks. "They're not really acquiring many assets from Twin Eagle," he says of Houston-based Expand Energy. "But it has improved their margins." He compares the approach with that of larger natural-gas producers such as EQT Corp., which about two years ago reacquired pipeline operator Equitrans Midstream in a roughly $5.5 billion deal. "Expand is doing it a little bit differently with Twin Eagle," Sorbara adds. "It's really asset-light." (luis.garcia@wsj.com; @lhvgarcia)
1522 ET - U.S. natural gas futures lose ground with high production and comfortable storage levels weighing against strong weather-driven demand and recovering LNG feedgas flows. "Lingering heat across Texas and the Southeast should support cooling demand through the remainder of August, while LNG exports are positioned to rise as maintenance concludes and new capacity ramps," Andy Huenefeld of Pinebrook Energy Advisors says in a note. But with production increasing as the shoulder-season approaches, "competing forces continue to favor a broadly balanced market rather than a sustained move in either direction," he adds. Nymex natural gas settles down 1.6% at $2.690/mmBtu. (anthony.harrup@wsj.com)
1502 ET - Oil futures settle higher as the U.S. and Iran vie for control over the Strait of Hormuz and President Trump says he's in no hurry to resolve the conflict. Gains accelerated after Iranian state media said an Emirati oil tanker was seized in the strait. "The Iranian route is one of the conditions, and payment for services and Iran's permit are other conditions that oil tankers must observe," the Fars news agency said.The U.S. continues its blockade of Iranian ports,with Centcom saying that to date U.S. forces have "redirected 64 commercial vessels, disabled 3, and boarded 2 to ensure compliance." WTI settles up2.5% at $84.50 a barrel and Brent rises 2.7% to $90.87 a barrel. (anthony.harrup@wsj.com)
1413 ET - Oil prices add to gains following an unconfirmed Iranian state media report that Iran seized a U.A.E.-owned oil tanker in the Strait of Hormuz. Both the U.S. and Iran claim to have control over the strait, which has seen limited shipping since the reopening agreed under the U.S.-Iran Memorandum of Understanding unraveled in July. The 60-day MOU expired Monday. President Trump told Fox News earlier that he is in no hurry to resolve the conflict and warned Oman against interfering with the U.S. blockade of Iranian ships in the waterway. WTI is up 2.5% at $84.46 a barrel and Brent rises 2.6% to $90.82 a barrel. (anthony.harrup@wsj.com)
1140 ET - Concerns about JetBlue's balance sheet are put on the front burner with the Iran ceasefire ending today, Seaport Research Partners analyst Daniel McKenzie says in a research note. If oil prices surge again from increased hostilities with Iran, JetBlue could be forced to boost debt, putting its balance sheet at risk of becoming too indebted, the analysts say. "Shares could ultimately become worthless," they say. The analysts had upgraded JetBlue shares to a buy rating in April based on the assumption that the Strait of Hormuz would open. Now, they're downgrading the shares to a neutral rating. Shares slide 5.7% to $5.33. (dean.seal@wsj.com)
1111 ET - Qatar leads most major Gulf stock markets lower as geopolitical uncertainty continues to weigh on sentiment. Qatar's QE index falls 1.5%, while the Dubai Financial Market General Index declines 0.5% and Saudi Arabia's Tadawul All Share Index slips 0.1%. Abu Dhabi bucks the trend, with its benchmark gaining 0.3%. GCC equities are showing a cautious tone, but the divergence across markets shows that domestic fundamentals, earnings, valuations and sector-specific catalysts are also playing a growing role, says Milad Azar of XTB-MENA. Abu Dhabi's relative resilience reflects stronger domestic fundamentals, liquidity and investor confidence in large-cap banking and energy stocks, he says. (farhan.rafid@wsj.com)
1109 ET - The eurozone's 0.4% rise in second-quarter GDP shows the economy has proved more resilient than the last energy-price surge in 2022, Capital Economics' Neil Shearing says in a note. The terms-of-trade shock has been smaller than feared as the jump in global energy prices has been more modest, particularly for natural gas. Europe has also reduced dependence on fossil fuels, as imports of oil have fallen by about 10% and natural gas by around 15% compared with 2022, Shearing says. Fiscal policy is also more supportive, and households have reduced savings. Manufacturers appear to have brought forward production in the second quarter to get ahead of perceived increases in energy costs further ahead, he says. (edward.frankl@wsj.com)
1013 ET - With stock-market valuations sky-high as investors make big bets on artificial-intelligence technology, a market correction looks probable, European Central Bank economists say in a blogpost. The rally in the tech sector has brought valuations to levels last seen during the dot-com bubble, they say. "Economic research on past technological revolutions points to a worrisome conclusion: a correction of current stock-market valuations is likely." Unlike during the dot-com bubble, there is less room this time to cut interest rates or use fiscal policy to cushion the fallout, they say. A correction would have severe consequences for the eurozone through investors' direct exposure to the U.S.'s Magnificent Seven tech stocks, and the "overexuberance" in European stock markets themselves, the economists add. (edward.frankl@wsj.com)
0951 ET - The Norwegian krone has scope to rise further due the prospect of oil prices remaining elevated and the possibility of the Norges Bank raising rates again, Rabobank's Jane Foley says in a note. Speculation that the Iran war could drag on could keep oil prices high, supporting the krone given Norway's position as a major energy exporter, she says. Inflation remains above the Norges Bank's target and the central bank has raised concerns about price pressures becoming embedded in higher inflation expectations. "Consequently, another rate hike this cycle remains a risk," she says. The euro falls 0.1% to 10.9127 krone after reaching a three-week low of 10.8920 earlier, according to LSEG. Rabobank lowers its three-month target to 10.80 from 10.90 previously.(renae.dyer@wsj.com)
0939 ET - Bitcoin rises slightly as markets trim U.S. interest-rate rise expectations but the cryptocurrency continues to trade in a tight range. Bitcoin has spent the past six weeks stuck between the technical support level around $62,000 and resistance at $66,000, Trade Nation's David Morrison says in a note. This has become rather frustrating for crypto traders as the lack of volatility has lessened interest in digital assets, he says. AI-adjacent stocks, particularly semiconductors, have caught traders' attention this year at the expense of cryptos, he says. The slow progress of crypto regulation also hasn't helped, he says. Bitcoin rises 0.8% to $63,553, according to LSEG. (renae.dyer@wsj.com)
0930 ET - Euro credit spreads are likely to stay fairly stable due to strong investor demand, healthy corporate financial positions and resilient growth in the eurozone, Metzler Capital Markets' Stoyan Toshev says in a note. Credit spreads have stayed relatively steady despite volatility in stock markets and sovereign yields amid the Middle East conflict. However, a possible escalation in the U.S.-Iran war, weaker corporate earnings, or a sharp economic downturn could cause euro credit spreads to widen, he says. (miriam.mukuru@wsj.com)
0926 ET - U.S. natural gas futures are lower after weekend weather forecasts shed some near-term heat, with the demand impact offset in part by recovering LNG feedgas flows. "While buried under production and weather headlines, strengthening LNG demand--if sustained--may help natural gas find support," Eli Rubin of EBW Analytics says in a note. "Higher supply over the next few weeks and cooler weather may mark a seasonal low for Nymex gas futures before they recover in the autumn." Gas for September delivery is off 2.2% at $2.672/mmBtu.
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