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.
0722 GMT - European energy stocks start the week higher as oil prices climb. Houthi rebels have seized key territory around the strategic Bab al-Mandeb Strait. This means the two most important energy corridors in the Middle East-including the Strait of Hormuz on the other side of the Arabian Peninsula-are under the sway of Iran and its allies. Drone attacks on Saudi Arabia's East-West pipeline have also increased supply fears. This pushes Brent crude 2.2% higher to $106.93 a barrel while WTI futures gain 2.2% to $102.23 a barrel. In London, BP gains 1.15% and Shell rises 1%. Spain's Repsol, Italy's Eni and France's TotalEnergies rise more than 1%. (adam.whittaker@wsj.com)
0422 GMT - An obligation to deliver gas to Australia's southern states is still missing from the government's domestic gas reservation exposure draft, says Commonwealth Bank of Australia's Vivek Dhar. That is "where the gas shortfalls are forecast," he says. The draft reaffirms CBA's view that Australia's Queensland state faces a substantial oversupply, but southern states may remain balanced to undersupplied, Dhar says. "Keeping the obligation broad to the east‑coast gas market alongside giving LNG [liquefied natural gas] exporters the power to cite infrastructure constraints to reduce their obligation means LNG exporters can substantially increase their supply in Queensland and still potentially meet their DSO," he says. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
0124 GMT - Brent crude prices are expected to remain elevated in 4Q, supported by persistent disruptions around the Strait of Hormuz, rising risks at Bab el-Mandeb and constrained Middle East exports, Hong Leong IB analyst Thye May Ting says in a note. Global oil supply deficits have widened as regional production and exports were disrupted, while recovering Chinese crude imports add further upside risk for Brent prices, she says. She expects Brent to be at $95/bbl-$100/bbl toward end-2026, and raises her 2026 average price assumption to $90/bbl from $80/bbl. Hong Leong maintains an overweight rating on Malaysian oil and gas sector, pegging Dialog as its top pick on its stronger earnings visibility. (yingxian.wong@wsj.com)
0007 GMT - Oil prices continue to rise as Middle East frictions fuel geopolitical risk premiums. Saudi Arabia last week shut a crude pipeline after Iran closed the Strait of Hormuz, while the IEA said it now expects a recovery in Middle East flows to stretch into next year. The energy price surge is stoking expectations of higher interest rates to combat inflation. Ahead of the Federal Reserve meeting this week, Goldman Sachs says oil prices might make FOMC voters, who had previously been ambivalent, a bit more open to hiking. GS now expects a 25bp rate increase instead of a hold, noting that the Fed might be reluctant to surprise a market pricing a nearly 90% chance of a hike. Front-month Brent crude oil futures are up 2.9% to $107.66 a barrel, while front-month WTI crude oil futures are 2.4% higher at $102.48 a barrel.
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