The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.
1819 ET - Citi is somewhat surprised by Wildcat Infrastructure's engagement with military shipbuilder Austal, which has been weighing a bid by South Korea's Hanwha for its U.S. operations. "From a transaction perspective, Hanwha's effective 19.9% stake (including swap) may represent a significant hurdle to any competing proposal," says analyst Sam Teeger. Still, it's unclear whether Hanwha can vote on a possible Wildcat-led transaction, he adds. Austal yesterday said it held a preliminary discussion with Wildcat, but hasn't received a proposal. Citi expects Hanwha to be the more logical buyer. "If the U.S. administration's objective is to accelerate naval shipbuilding capacity, Hanwha's extensive shipbuilding expertise appears an advantage, albeit with the caveat that its defense experience has largely been in Korea rather than U.S.," Citi says. It has a buy call on Austal. (david.winning@wsj.com; @dwinningWSJ)
1033 ET - Stocks in Dubai and Qatar gain while Saudi Arabia fall as geopolitical risks weigh more heavily on the latter, says Mazen Abou Ismail, head of trading desk at FFA Private Bank Dubai. Dubai is being supported by domestic growth and Qatar by its LNG exposure, while Saudi Arabia is more sensitive to risks around infrastructure, shipping and broader regional sentiment, he says. Oil near $97 supports government revenues, but recent attacks on Saudi assets, including the Jazan refinery, are adding to the risk premium. The Dubai Financial Market General Index rises 0.8%, Qatar's QE Index gains 0.5% and Saudi Arabia's Tadawul All Share Index falls 0.4%. (farhan.rafid@wsj.com)
1031 ET - Oil prices extend earlier gains, with Brent crude marching toward $100 a barrel as fresh exchanges of strikes between the U.S. and Iran keep the geopolitical risk premium high. The global oil benchmark is up 1.3% to $97.56 a barrel, while WTI futures rise 1.4% to $92.72 a barrel. "A sustained disruption to actual crude flows could quickly push prices above $100 a barrel," analysts at brokerage firm Kotak Securities. "Tightening inventories and stronger refined-product prices add support." In the U.S., Labor Day weekend travelers are facing the highest gas prices ever for this time of year. According to AAA, the national average price at the pump was $4.15 on Monday, a record high for the holiday. (giulia.petroni@wsj.com)
0939 ET - Investors are increasingly pricing in the possibility of the Bank of England raising interest rates in the coming months due to inflation concerns as oil prices rise. Markets fully price in one quarter-point BOE rate increase by December, and a second rate hike by March 2027, LSEG data show. Brent crude price rises 1.1% to $97.39 per barrel. (miriam.mukuru@wsj.com)
0925 ET - Global markets could face increased volatility due to rising geopolitical tensions, uncertainty around the U.S. midterm elections and an unclear outlook on U.S. interest rates, Validus Risk Management's Kambiz Kazemi says in a note. Renewed U.S.-Iran hostilities have caused oil prices to rise and weakened risk appetite. "Monetary policy uncertainty, political risk and geopolitical tension" could drive volatility across asset classes, he says. Ten-year gilt yields rise 1.9 basis points to last trade at 5.158% and ten-year Bund yields climb 2.8 basis points to 3.369%, Tradeweb data show. (miriam.mukuru@wsj.com)
0743 ET - Fitch Ratings affirmed Qatar at AA with a negative outlook as risks from the U.S.-Iran war continue to weigh on the sovereign's fiscal and debt profile. Fitch now forecasts Qatar's economy to contract 18.8% in 2026, with the general-government deficit at 2.7% of GDP and debt rising to 64.1% of GDP, before growth rebounds 16% in 2027. The rating committee highlighted risks of further damage to hydrocarbon infrastructure, uncertainty over LNG transit through the Strait of Hormuz and the conflict's impact on fiscal accounts, reserves and Qatar Investment Authority assets. (farhan.rafid@wsj.com)
0617 ET - The 1.1% drop in German industrial output in July defies the solid order intake and noticeable recent improvement in business sentiment, KfW chief economist Dirk Schumacher says. "The decline in industrial production can therefore be explained primarily by production changes in the automotive industry," he says. German data agency Destatis noted that a multi-week shutdown at a car plant was likely one of the main drivers of the fall. In August and September, the low water levels of the Rhine likely further dampened production, Schumacher says. However, the signals from orders and sentiment indicators point to the underlying improving trend, even if that will probably only be reflected in the figures for the fourth quarter, he says. (edward.frankl@wsj.com)
0557 ET - A fragile and uncertain geopolitical backdrop, with oil prices rising due to renewed hostilities in the Middle East, should sustain demand for the U.S. dollar as a safe-haven asset, Eleonex CEO Stefan Arsenovic says in a note. Persistent tensions in the Middle East also sustain inflation concerns and reinforcing the case for the Federal Reserve to raise interest rates, he says. The dollar falls on Monday, for now shrugging off higher oil prices in thin trade due to a U.S. public holiday and helped by gains in the Japanese yen. This week's input for the dollar could come from producer prices on Thursday and consumer prices on Friday. The DXY dollar index falls 0.2% to 98.953. (emese.bartha@wsj.com)
0442 ET - BHP continues to monitor the uranium market, but needs it to be at least three times the size to potentially become a pillar of the giant miner's portfolio, says Citi. "Uranium is only a $10 billion market currently and needs to be a circa $30 billion market in 2-3 decades to be one of BHP's pillars," it says. The bank's remarks follow recent meetings with BHP management. Discussions centered on the company's organic growth pipeline in copper, which appears to preclude near-term, large-scale M&A, says Citi. "Regarding copper, the buy vs build decision is heavily stacked in favor of organic growth (difficult to justify acquiring copper companies at over $80,000/ton of production when BHP is developing assets at $20,000-30,000/ton of production), according to the company," Citi says. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
0434 ET - China's artificial-intelligence strategy is accelerating investment in infrastructure and broadening AI adoption across related sectors, according to Moody's Ratings in a research note. Infrastructure companies are increasingly participating in China's AI ecosystem as investors, developers and users of AI technologies, it points out. "Applications in power grids, power generation, ports, airports and toll roads are already improving forecasting, dispatch, maintenance and asset utilization, generating measurable operational benefits," it says. (tracy.qu@wsj.com)
0425 ET - Brent crude could climb to $120 a barrel if attacks on shipping in the Middle East intensify, Goldman Sachs's Daan Struyven says in an interview with Bloomberg. "The events over the last few days do suggest the risk of shipping disruptions broadening and intensifying is an important one," the co-head of global commodities research says. In a scenario where exports from the region normalize, Brent is seen at $80 a barrel, in line with the level of OECD commercial stocks, according to Struyven. The global oil benchmark currently trades around $97 a barrel. (giulia.petroni@wsj.com)
0412 ET - European natural-gas prices climb more than 2%, trading just shy of 74 euros a megawatt-hour as supply flows from Qatar remain severely disrupted. "LNG has not been flowing out as much as crude oil, leaving the gas market increasingly vulnerable as we near the 2026/27 heating season," ING analysts say. Qatar, one of the world's largest LNG exporters, recently extended force majeure on liquefied natural gas shipments for Edison--one of its largest European customers--through early November. Meanwhile, gas storage levels across the EU are currently 66% full, below the seasonal average. In early European trading, the benchmark Dutch TTF contract is up 2.4% to 73.73 euros a megawatt-hour.
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